The SEC Further Clarifies Decentralization Standards for Crypto Networks On November 2nd, the SEC's Corporate Finance Division updated its Crypto Asset Q&A, explaining community governance, centralized control, and the relationship between network availability and decentralization in digital goods-related networks. For networks already operational, if participants in a broad governance system are not interconnected and do not act in unison through formal or informal agreements, arrangements, or tacit agreements (including delegation), they are generally not considered a group simply because of joint governance. Even if they constitute a group, they must possess control over network operations, the economy, or voting to meet the definition of a centralized entity. Specific circumstances must be considered. SEC staff believe that proposals, discussions, voting, and implementation should be promptly disclosed. Governance should follow established objective procedures, allowing developers, validators, token holders, and other participants to participate independently and reach consensus or binding decisions. Procedures cannot be unilaterally modified by a single participant or a group acting in concert, bypassing established procedures. Participation and decision-making power cannot be directly or indirectly concentrated in the hands of a single entity or a related, concerted group through delegation. The governance system is housed within organizations such as foundations, and those holding the native token participate in governance, adhering to the same principles. However, if a foundation controls another crypto system, it may still be the central party in that system. In discussions of digital goods, a central party is considered to have oversight participation if it has the power to control access at any level—the protocol, validators, or users. The SEC has listed specific examples, including a party having the power to unilaterally restrict network access, decide who can participate in validating, decide or modify voting procedures for software upgrades, protocol changes, or native token allocations, or modify rule code, reverse transactions, or revoke access permissions. If all critical aspects of network operation are executed automatically by code without human discretion, or if discretionary aspects are entirely determined by a broad, compliant governance system, and the participants do not constitute a central party, oversight participation is generally not considered to exist. A network's ability to function does not equate to complete decentralization. The former depends on whether the native token can be used according to the system's programmatic purposes; the latter depends on whether the network operates autonomously and whether any individual, entity, or group controls operations, the economy, or voting. In its discussion of digital goods, the SEC believes that such tokens, when distributed across functional networks, lack a central authority to oversee participation or distribute rewards to users, exhibiting decentralized characteristics, though the degree of decentralization depends on the specific circumstances. For exchanges and institutions, these interpretations may provide more specific guidance for token due diligence, such as verifying whether voting power is concentrated, who controls validator access, and protocol upgrades. The SEC also specifically clarifies that the interpretation of Question 1.4 regarding governance groups only applies to the description of digital goods in Part III of the explanatory document and does not apply to other definitions or provisions concerning groups in securities and exchange laws, including the definition of exchanges. Regarding buybacks, previous SEC Q&As stated that if the network is operational and without a central authority, an issuer's announcement of a buyback of non-security crypto assets does not constitute a statement or commitment to conduct critical management activities. However, if the network is inoperable, and the issuer describes the buyback as providing benefits to holders, such an announcement may constitute a statement or commitment. This Q&A represents the views of SEC corporate finance staff and has no legal force in itself. A @Gate account, trading more markets.