The U.S. Securities and Exchange Commission’s Division of Corporation Finance updated its crypto asset FAQ on November 2, 2026, adding three entries—questions 1.4 through 1.6—that expand the agency’s March interpretation of federal securities laws for digital assets. The new guidance focuses on shared governance, control over network access, and the difference between a token’s functionality and the decentralization of its underlying system. The FAQ explicitly carries no legal force and creates no new obligations.
Question 1.4 addresses when governance participants become a central party. Staff state that unaffiliated participants generally will not be treated as a controlling group if they have no separate agreement or understanding to act together outside governance participation. This assessment also covers formal arrangements, informal coordination, and delegation. Where governance sits within an organization, association, or foundation and participation depends on holding a native token, the same approach applies. Even if participants qualify as a group, they must possess operational, economic, or voting control to meet the central-party definition. Miles Jennings welcomed the update, saying it clarifies how systems can maintain decentralized governance while using legal entities such as DUNAs, although the FAQ does not name DUNAs or approve any specific organization.
Question 1.5 defines oversight through unilateral access powers. The SEC identifies examples including granting or limiting access, changing voting procedures, deciding who validates transactions, modifying code, reversing transactions, or revoking access. By contrast, material operations can run automatically through rules-based code without discretion, or discretion may be exercised solely through a system’s governance process if participants are not a central party. Question 1.6 distinguishes functionality from decentralization: a token is functional when its native asset can be used according to its programmed utility, while decentralization concerns autonomous operation without operational, economic, or voting control by a person, entity, or coordinated group.
The update drew attention to the distinction between staff guidance and legislation. Journalist Eleanor Terrett described the FAQ as an effort to clarify decentralization questions that the CLARITY Act would address in law. Avi Lev cautioned that the FAQ is not law and that a future SEC could rewrite the guidance. The Commission has neither approved nor disapproved the FAQ’s contents. The underlying March framework separates digital commodities, collectibles, tools, stablecoins, and digital securities, and Chair Paul Atkins previously called it an “important bridge” while Congress advances legislation.
