United States · Regulation & crypto · Source: SEC

SEC staff add three crypto FAQs on governance and 'central party' control

Published 2 Nov 2026

Editor: Hedal Kolanyi / AI-assisted

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Summary: On 2 November 2026 the staff of the US Securities and Exchange Commission's Division of Corporation Finance added three questions to its crypto-assets FAQ. They explain how staff view governance participants and control when assessing whether a crypto network has a "central party".

What happened

The Division of Corporation Finance updated its crypto-assets FAQ page, adding questions 1.4, 1.5 and 1.6. The page was originally issued on 25 September 2026 and shows an update date of 2 November. The page states that the answers represent the views of the Division's staff, are not a rule, regulation or statement of the Commission, and have not been approved or disapproved by the Commission. Like all staff guidance, they have no legal force or effect.

Question 1.4 asks whether participants in a functional crypto system's broad-based governance system count as a "group of persons or entities" for the purpose of the "central party" definition. Staff say this depends on facts and circumstances. Staff say such participants generally would not count if they are not affiliated and have no agreement, arrangement or understanding, formal or informal, to act in concert (including through delegation) apart from their participation in the governance system itself. Even if they did count, staff say they would have to have operational, economic or voting control of the crypto system to meet the "central party" definition. In a footnote, staff add that this view applies only to the description of digital commodities in the Commission's March 2026 interpretive release and has no relevance to other definitions under the Securities Act or the Exchange Act, such as the definition of "exchange".

Question 1.5 addresses what it means to "oversee participation". Staff say a central party oversees participation when it has the authority to control access to the crypto system at any level, whether the protocol, validator or user level. Their examples are unilateral authority to grant or limit access, to determine or change voting processes for upgrades, protocol changes or distributions of the native crypto asset, to control who takes part in the consensus mechanism, or to modify the code, reverse transactions or revoke access. They add that a central party generally does not oversee participation where every material aspect of the system's ongoing operation runs automatically under rules-based code without anyone's discretion, or where any material discretion is exercised solely through a broad-based governance system whose participants are not themselves a central party.

Question 1.6 says "functional" and "decentralized" are distinct concepts that address different aspects of a crypto system's design and operation. Staff add that a functional crypto system to which a digital commodity is native has characteristics of decentralization, although the degree can vary with the facts and circumstances.

Background

The FAQ builds on the Commission's interpretive release of 17 March 2026, which grouped crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities. In August 2026 the SEC also proposed "Regulation Crypto Assets" (Release 33-11434), published in the Federal Register on 21 August. It includes exemptions for offerings of up to $5 million over four years and up to $75 million per 12 months, plus a conditional safe harbor from the term "investment contract" in the definition of "security". The comment period closed on 20 October 2026. The proposal is not final.

Crypto outlet Coin Edition reported on 3 November that the staff added these three questions, which matches the SEC page.

Why it matters for markets and crypto

For the crypto sector, this is directly relevant staff guidance, although it is not binding. How a network's governance and control are described can affect how projects design themselves and how lawyers assess US securities-law questions. Staff FAQs can change, and they do not bind the Commission or the courts. This article does not assess any specific asset or project, including xorchain.io, and does not offer legal or investment advice.

What to watch next

No fixed date: The SEC has not set a date for adopting a final Regulation Crypto Assets rule; the comment period has ended.
Further updates: The staff may add more FAQs; the SEC page shows its latest update date.

Sources

Disclaimer: Xorchain Economy news is provided for general information only. It is not financial, investment, legal or tax advice, and it is not an offer or recommendation to buy, sell or hold any asset. Articles are written in our own words from official and other public sources, which are credited and linked at the end of each article. Short quotes are attributed to their authors. Articles are prepared with AI assistance and reviewed by the editor before publication. Figures may be revised by the source, and the original publication prevails. Xorchain is an early-stage project, has no token for sale, and has no affiliation with the institutions mentioned unless stated. Do your own research and consult a qualified adviser before making financial decisions.

Conflict of interest: xorchain.io is an early-stage blockchain project; the author has an interest in it. This is not investment advice.

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