Three steps that – it believes – are pushing it toward much-needed decentralization have been taken by Polkadot (DOT) and therefore calls on the SEC to reevaluate it so that it is not categorized as a chattel asset.
The DAO Report
Back in 2017, the SEC had released “Report 21A“, better known as “The DAO Report“, through which it presented the reasons why it believed that the cryptocurrencies or tokens of most DAOs should be considered as securities and thus brought under its strict regulations in this regard.
The report also set out a number of actions that could be taken by the organisations issuing the cryptocurrencies or tokens in order to make them not be considered as securities but as decentralised assets.
Accordingly, in line with these facts, the Web3 Foundation (W3F) has expressed the view that Polkadot’s currency, named DOT, is not a negotiable instrument and is therefore asking the SEC to evaluate the project.
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Software, not movable value
Specifically, the W3F states that DOT was never intended to function as a movable value, but as a Layer-1 blockchain on which other companies could build, as explained by Chief Legal Officer, Daniel Schoenberger.
“When we were thinking about launching the Polkadot network, there was no intention on our part to issue a mobile value. We always thought of DOT as a vertical agnostic and agnostic use case coordination software,” he said.
However, the DOT development team admits that the project could have appeared to be intended primarily for economic use and assured that they have taken steps to correct this view.
The steps toward decentralization
Since 2019, when the Polkadot white paper was published, the W3F development team has held repeated meetings with the SEC to assess the progress of the project and to establish that the DOT is not operating as a moving target.
According to the W3F, for DOT to be considered simply as software, true decentralisation had to be achieved and so the organisation had taken three key steps in this direction.
First of all, the W3F attempts to ensure that all advertising for Polkadot focuses on the technology and not on the currency itself.
Second, the W3F has imposed restrictions on cryptocurrency “whales” by limiting the percentage of the total DOT offering in order to ensure fair votes and fair governance.
Finally, most importantly, the W3F has reportedly refused to sell DOT to hedge funds and venture capitalists interested in it as a pure fiduciary investment.
As a result, the W3F team believes that DOT has “morphed” into software and is requesting a review of its status by the SEC.