Metamorphosis

Due to the catastrophes we got to witness in 2022, all eyes have really been on exchanges and defi protocols as of late. So much so,  that we may have overlooked a protocol that the SEC once considered a security, morph into a software company. According to the Web3 Foundation, the World Economic Forum and the Securities and Exchange Commission have both deemed DOT a software company.

• According to the foundation, DOT has been working with the SEC for the last 3 years to make the transformation.
• They also believe they have a workable theory of how an increasingly decentralized protocol can transform into a software company.
• Conservative marketing is one way the SEC advised the foundation behind Polkadot to adhere to strict US securities. An essential aspect of that was no token shilling.
• Another major portion of compliance was in token distribution, so no VC or one person had too much control over the supply of DOT. (We can see how this was important with the recent revelations of the SOL supply.)

The next step would likely be a ‘No Action Letter’ from the SEC, however, that may be asking too much from the agency as they have said that it is not their responsibility to provide legal guidance. Nevertheless, the Web3 Foundation has discussed this transformation on their Twitter profile and tagged the SEC, so if they were not in agreement, we would probably know relatively soon.