SEC staff: token governance voters generally are not a 'central party'

The SEC has given crypto networks a clearer test for one of the most contested words in token regulation: control. On Nov. 2, 2026, the staff of the Division of Corporation Finance added three new answers (questions 1.4 to 1.6) to its FAQ on the Commission's March 17, 2026 crypto interpretive release.

The release says a functional crypto system has no "central party", defined as a person, entity or group with operational, economic or voting control. The new FAQs explain who counts as that group.

Governance voters are not automatically a group

According to the FAQ, participants in a functional crypto system's broad-based governance system "generally will not be considered a 'group of persons or entities'" for the central-party definition if they are not affiliated and do not have an agreement, arrangement or understanding to act in concert, including through delegation, outside the governance system itself. The answer is the same when governance sits inside an organization, association or foundation and participation is based on holding the native token.

Even if voters were a group, they would still need operational, economic or voting control to count as a central party. A footnote sets the bar for "broad-based": transparent, rules-based and "wide and diverse", with authority not concentrated through delegation.

What "oversees participation" means

A central party oversees participation when it has unilateral authority to grant or limit access, change voting processes for upgrades or token distributions, control who validates transactions, or modify code, reverse transactions or revoke access, the staff wrote. It generally does not when operations run automatically under rules-based code, or when discretion is exercised only through broad-based governance.

Question 1.6 separates two ideas: a system is functional if its token can be used as programmed, and decentralized if no one has operational, economic or voting control. a16z crypto's Miles Jennings welcomed the update, crypto.news reported, while journalist Eleanor Terrett described it as an effort to clarify questions the CLARITY Act would address in law.

The limits are explicit: the FAQs "have no legal force or effect" and the Commission has neither approved nor disapproved them, the SEC states.