SEC Staff Says Governance Tokens Won't Be Securities If Decentralized

The Securities and Exchange Commission has resolved a major question for governance tokens such as Uniswap's UNI: can granting voting rights to numerous holders turn a token into a security?

The SEC staff now states that in general it does not, as long as the network is genuinely decentralized. This clarification may remove a significant regulatory hurdle for decentralized finance projects and their investors.

What Did the SEC Clarify?

In its November 2 update, the SEC staff explained the fit of governance tokens within the agency's March crypto framework.

Governance tokens enable holders to vote on the operation of a crypto project. For instance, UNI holders can vote on modifications to Uniswap, including how the protocol uses its funds.

Before this update, there was confusion about whether thousands of people voting collectively could be considered a single controlling group.

This matters because a cryptocurrency that operates without a central controller could be treated as a digital commodity rather than a security, subject to different regulations.

The SEC staff determined that independent holders casting votes in a decentralized framework typically do not form a controlling group.

However, projects need to demonstrate that voting power is spread broadly. If a company or small group can unilaterally change network rules, limit access, or reverse decisions, that might still mean central control.

What This Means for UNI and Other Tokens

For investors, the explanation lowers one source of uncertainty around governance tokens.

This could, over time, make exchanges and institutional investors more relaxed about handling qualifying tokens. It does not, however, automatically classify UNI or any governance token as a commodity.

Uniswap is especially notable because its community voted on adopting a Wyoming DUNA, a legal framework for decentralized organizations.

The SEC just released a helpful new FAQ to clarify its token taxonomy further.

Q 1.4 – Establishes that systems can maintain decentralized governance and make use of legal entities like DUNAs.

Q 1.5 – Distinguishes between permissioned and permissionless systems.

Q 1.6…

— miles jennings (@milesjennings) November 2, 2026

A key caveat exists: this SEC staff guidance is not legally binding. It is not a new law, and later regulators might see things differently.

The CLARITY Act could have offered firmer legal certainty, but it stalled in September. Tuesday's midterm elections will shape the next Congress that will take up the issue.