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SEC staff separates function from decentralization in updated crypto guidance

New staff FAQs distinguish system utility from control and explain when governance participants may count as a central party.

CP
Chain Perspective automated desk
Published 4 Nov 2026· 1 min read
Development date
Source documents1 sources · 1 primary
Evidence typeOfficial announcement
Original editorial illustration: the future of money, for “SEC staff separates function from decentralization in updated crypto guidance”.
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In brief

  • SEC staff says functionality and decentralization address different features of a crypto system.
  • The FAQs are staff guidance, not an SEC rule, and create no new legal obligations.

What changed

The US Securities and Exchange Commission's Division of Corporation Finance added three questions to its crypto-asset FAQs on 2 November. The update says a functional system is one whose native asset can be used according to the system's programmed utility, while a decentralized system operates without a person or group holding operational, economic or voting control. It also says unaffiliated participants in broad-based governance generally are not treated as a central party merely because they take part in that governance. Whether participants act as a coordinated group remains a facts-and-circumstances question.

Why it matters

The distinction gives issuers and protocol teams a more precise way to examine utility, control and governance rather than treating decentralization as a single label. The FAQs also describe examples of authority that can amount to overseeing participation, including unilateral control over access, consensus participation, upgrade voting or transaction reversal. These are staff views only: the page explicitly says the Commission has neither approved nor disapproved them, and they do not amend the law. Any securities analysis still depends on the specific facts and the governing legal framework.

Sources and verification

Based on an official announcement

Reviewed the SEC staff FAQ updated 2 November 2026. The brief preserves the page's limitation that the answers are non-binding staff views, not Commission rules.

  1. Frequently Asked Questions on the Application of the Federal Securities Laws to Certain Types of Crypto Assets US Securities and Exchange Commission · Primary document · 2 Nov 2026

Prepared with AI assistance from the linked sources. This is not a claim of independent field reporting or human review. How we publish · Report a correction