DeFi Education Fund
@fund-defi
🚨The DeFi Education Fund and Uniswap Foundation provided a submission to the SEC Crypto Task Force focused exclusively on DAOs. What’s the TLDR? See the 🧵 👇
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DeFi Education Fund
@fund-defi
For context, our submission is in response to Commissioner Hester Peirce’s Feb 21, 2025 Statement: “There Must Be Some Way Out Of Here.” While the statement does not specifically mention DAOs, Commissioner Peirce *did* ask for comments on matters that are critical to DAOs, like governance and dispersion of control.
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DeFi Education Fund
@fund-defi
Specifically, we present two main theses for consideration of the SEC Task Force:
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DeFi Education Fund
@fund-defi
1️⃣ First, we provide an overview of DAOs & Network Tokens, and discuss smart-contract based governance. 2️⃣ Then, we get into prior SEC actions and pronouncements concerning DAOs, and explain why further guidance related to DAOs and decentralization is of the utmost importance.
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DeFi Education Fund
@fund-defi
We note: “The lack of clarity from the Commission’s prior statements and DAO-related enforcement activity has left the public without meaningful guidance. This lacuna raises concerns about the treatment of DAOs going forward, including in areas addressed by Commissioner Peirce relating to the criteria used to evaluate decentralized networks as relevant to the federal securities laws.”
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DeFi Education Fund
@fund-defi
We then argue that when analyzing decentralization of a network under the securities laws, the SEC should: ➡️ focus on “the existence of dispersed control over the governance of a network or protocol, rather than the ongoing efforts of developers or other identifiable groups as ‘active participants,’” and ➡️ recognize that “ongoing efforts to maintain or develop a system without centralized control do not create information asymmetries and trust dependencies that would normally implicate the need for disclosure and regulation under the securities laws.”
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DeFi Education Fund
@fund-defi
Last, we respectfully urge the SEC to implement the following principles via guidance or a staff statement: 👉 The Commission should treat DAOs with decentralized control over governance of the network as nothing more than disparate and dispersed groups of people, unless facts are developed that indicate otherwise; 👉 The Commission should recognize that DAOs with decentralized control over the governance of the network are not an identifiable and coordinated group of “others” undertaking efforts for the purposes of the “efforts of others” prong of a Howey analysis; and 👉 The Commission should recognize that blockchain records are a uniquely transparent and immutable resource that eliminate informational asymmetries.
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DeFi Education Fund
@fund-defi
We are very grateful to our partners at Uniswap Foundation for their collaborative efforts on this submission as well as the brilliant team at Morrison Cohen LLP for their guidance and assistance in drafting this submission.
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