The DeFi Education Fund and the Uniswap Foundation have thrown down the gauntlet against the Securities and Exchange Commission’s regulatory stance on decentralized autonomous organizations (DAOs). In a letter dated May 27, the crypto lobby duo urged the SEC’s Crypto Task Force, led by Hester Peirce, to take a step back from imposing securities regulations on DAOs, arguing that these entities, when sufficiently decentralized, don’t fit neatly into the conventional securities framework defined by the Howey test.
A Call for Reevaluation
The letter, a sharp and well-argued document, makes the case for recognizing DAOs as distinct from traditional financial entities. It contends that DAOs, which operate through a dispersed collection of tokenholders with active governance and participation opportunities, transcend the typical identifiers used in securities classification. The argument hinges on the notion that such decentralized entities should be treated like individuals or informal groups unless proven otherwise.
This stance is a direct response to Peirce’s call for comments on crypto regulations back in February. The crypto community is clearly rallying for a more nuanced regulatory approach, one that fosters innovation rather than stifles it. “If a DAO has a dispersed collection of tokenholders who have the opportunity to actively participate in and govern the DAO and the network, it is sufficiently decentralized,” the letter asserts with conviction. This mirrors the sentiments expressed in our coverage of crypto groups urging the SEC for clarity on staking, highlighting a broader demand for regulatory transparency.
The SEC’s Shifting Stance
Here’s the catch: the SEC’s regulatory posture has undergone significant shifts over recent years. Under the Trump administration, the agency, with Paul Atkins at the helm—himself a former crypto lobbyist—adopted a more favorable view towards blockchain technology, recognizing its potential to revolutionize market activities. Atkins has been vocal about the need for a regulatory environment that does not stifle innovation. He even criticized the Biden administration’s approach as overly restrictive.
As of May 20, 2025, Atkins confirmed that the Crypto Task Force is gearing up for its first comprehensive report, set to be released in the upcoming months. This report, coupled with a series of roundtable discussions with key industry players, signals a possible shift towards more constructive engagement with the crypto community. For a deeper dive into the regulatory implications, see our coverage of the Crypto Coalition’s stance on staking as an ‘essential good’.
Implications for the Crypto Market
What does that mean for the crypto world? The outcome of this regulatory tug-of-war could have far-reaching implications. If the SEC heeds the DeFi Education Fund and Uniswap Foundation’s call, it could pave the way for more DAOs to thrive without the looming shadow of securities regulation. This could, in turn, bolster innovation and market activity within the crypto space.
However, skepticism remains. The question of whether DAOs can truly operate without some form of oversight is a contentious one. Critics argue that without clear regulatory guidelines, the potential for misuse and market manipulation looms large. Yet, the proponents of decentralization counter that innovation should not be shackled by outdated regulatory frameworks.
As the SEC navigates these complex waters, the crypto community watches closely, hopeful for a regulatory environment that embraces the transformative potential of blockchain while safeguarding against its excesses. The forthcoming report from the Crypto Task Force could very well be the harbinger of a new regulatory era—one that balances the need for oversight with the imperative for innovation.
In the end, the stakes are high, and the world waits to see whether the SEC will embrace this opportunity to redefine its approach to crypto regulation. The dialogue between regulators and the crypto community is just beginning, and the outcome could shape the future of decentralized finance for years to come.
Source
This article is based on: Crypto lobby group says SEC should back off regulating most DAOs
Further Reading
Deepen your understanding with these related articles:
- The SEC Can Learn From the IRS in Making Regulation Simpler for Crypto
- UK’s FCA Seeks Public and Industry Views on Crypto Regulation
- U.S. Congress Braces for Intense Debate Over Crypto Legislation This Summer (openai)
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
