The SEC Just Defined Who Counts as the 'Central Party' — Three New FAQs That Decide a Token's Status
On November 2, 2026, staff in the SEC’s Division of Corporation Finance added three questions to the agency’s crypto asset FAQ. They are numbered 1.4, 1.5 and 1.6, and all three address the same sentence in the Commission’s March 2026 interpretation: a functional crypto system “does not have a central party that oversees participation or distributes rewards to users.” That sentence carried a lot of weight and very little detail. The new answers supply the detail. They cover when a governance electorate counts as a “group,” what it means to oversee participation, and why “functional” and “decentralized” are not synonyms. For a US token issuer deciding whether its native asset is a digital commodity or a security, these are the operational questions. ...