SEC Staff Clarify Criteria for Identifying Central Parties Among Token Gove

SEC Division of Corporation Finance issued new crypto asset guidance on November 3, clarifying that token holders who participate in governance but act independently—without coordination arrangements beyond broad governance participation—generally do not constitute a "group of central parties" in determining whether a digital asset is a security, though determinations remain fact-specific. Even where participants do form a group, they must hold operational, economic, or voting control to meet the central party definition. Staff also noted that unilateral powers—such as deciding system access, changing voting procedures, setting validator eligibility, or modifying code—can constitute control over a system's operation. The guidance carries no legal force, reflecting staff views only, and has not been approved or rejected by the full SEC Commission. The clarification matters for DeFi protocols and DAOs navigating token classification risk, as decentralized governance structures may reduce the likelihood of being deemed centrally controlled. Watch for how this framework shapes future token issuance disclosures and whether the Commission itself adopts or revises the staff position.