By George Ward
Web3 Foundation, the entity behind the development of Polkadot (DOT), has told the US SEC that DOT is not security. Hence, the regulator should not consider DOT a token under its jurisdiction.
Web3 Foundation Argues That DOT Is Not A Security
Last week, Daniel Schoenberger, the CLO of Web3 Foundation, stated that Polkadot’s native coin was “morphed.” Hence, it is not a security but more of software.
Meanwhile, Web3 Foundation oversees fundraising efforts for the Polkadot blockchain. According to Schoenberger, this view is similar to the information the Foundation sent to the regulator.
Since November 2019, the Foundation has constantly discussed this with the financial watchdog agency. But, unfortunately, Polkadot did not consider that the platform’s native coin would be a security.
However, we were aware that SEC believed Polkadot’s native coin would probably be a security,” Schoenberger added. He continued saying the team was willing to take steps to ensure its DOT token was not a security.
Furthermore, the CLO stated that the Foundation met with FinHub, the regulator’s fintech arm. This was after Gary Gensler, the Chairman of SEC, asked crypto entities to “come and talk.”
As stated by Schoenberger, the team also produced a “workable hypothesis of how token morphing may be performed” for DOT. But, this was due to the SEC’s objections and federal securities regulations.
Additionally, the fundraising entity shares its theory with the agency several times. However, it is not sure if the agency agreed to their assertion.
SEC Using Enforcement Action In The Crypto Sector
The SEC has frequently used enforcement as a basis for regulation. For example, in July, the agency stated that nine tokens were securities. As a result, several exchange firms like Binance delisted such tokens from their platform.
This was one of many instances in which the SEC has used force as a basis for crypto regulation. Meanwhile, the assertion made by Schoenberger that the DOT token is outside the regulatory supervision exercised by the SEC is comparable to that made by many promoters of XRP.
Ripple has been in a year-long legal battle with the US SEC. The regulator argued that the company, Brad Garlinghouse (Ripple’s CEO) and Christian Larsen (Ripple’s co-founder), raised over $1 billion by selling unregistered securities.
However, Ripple stated that XRP is not a security. Hence, it was not under the regulator’s purview. Ripple supporters have also criticized the securities regulator for prolonging the matter in court.