CLO Daniel Schoenberger claims that the group addressed the SEC’s concerns and federal securities regulations to provide a “workable theory of how token morphing may be performed” for DOT.
The group behind Polkadot’s R&D and blockchain fundraising activities has contended that the DOT token is not a security and so falls outside of the authority of the U.S. Securities and Exchange Commission.
After beginning talks with the SEC in November 2019, Schoenberger said that this assertion was “consistent with the views” it had conveyed.
“It was clear to us that the SEC was likely to interpret the token to be distributed as security at the moment of delivery, even though the Polkadot vision had not considered the possibility that the blockchain’s native token might be a security. We were prepared to do whatever it needed for DOT, the Polkadot blockchain’s native coin, to be classified as a non-security.”
As part of chair Gary Gensler’s ongoing invitation to crypto businesses to “come in and speak,” the SEC’s chief legal officer (CLO) claimed the Web3 Foundation has met frequently with the SEC’s fintech branch, FinHub. Schoenberger claims that the group addressed the SEC’s concerns and U.S. federal securities rules to provide a “workable theory of how token morphing may be performed” for DOT.
It is uncertain if the federal regulator would react to the accusations that seem to infringe on their jurisdiction. The SEC has often used enforcement proceedings as a foundation for regulation; in a case against a former Coinbase product manager in July, the agency expressly classified nine tokens as “crypto asset securities.”
A lawsuit has been filed against Ripple, CEO Brad Garlinghouse, and co-founder Christian Larsen for allegedly utilizing unregistered sales of XRP to generate over $1 billion. Those who back Ripple have said the token is not a security, and they have attacked the SEC for overstepping its bounds.
Also Read: OFAC Compliance Brings Ethereum Further Closer To Absolute Censorship
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