Blockchain Association Urges SEC to Set Token Decentralization Standards

The Blockchain Association is asking the SEC to define when a crypto token is decentralized enough to no longer be treated as an investment contract, seeking a federal standard for token status.

In a comment letter on the SEC's crypto-asset regulation proposal, the industry group recommended raising the startup exemption cap to $10 million and the fundraising exemption cap to $150 million. It also proposed allowing on-chain transparency to substitute for audits under the fundraising exemption and excluding airdrops from its cap.

The association called for a third-party filing safe harbor for tokens already in circulation. It proposed open-source code and the absence of unilateral censorship power as possible measures of decentralization.

The group also urged federal law to take precedence over state laws and backed 24/7 exchange trading and self-custody. Together, the proposals cover token classification, fundraising and access to continuously operating crypto markets.