Polkadot restates its case that DOT has ‘morphed’ away from security status

Published at: Jan. 26, 2023

The Web3 Foundation, which supports the Polkadot protocol, has again presented its argument that its native DOT (DOT) token is not a security. In a Twitter thread, the foundation emphasized its efforts to comply with U.S. securities laws, as well as Securities and Exchange Commission guidance on digital assets, and declared that DOT had successfully “morphed” and is software, not a security. 

The Web3 Foundation reposted an excerpt from a December Twitter Space where Angela Dalton, identified as an adviser to the foundation, described how representatives accepted the SEC’s invitation to “come in and talk to us.” Subsequently, the foundation claimed:

“The Foundation made sure the SEC's full vision of token morphing was addressed, […] as well as taking steps to manage the distribution of the DOT token so that no individual holds a large percentage of the network, turning down purchases from VCs interested solely in investment purposes, and promoting the tech but not the token.”

“The Foundation is confident DOT has morphed and is not a security. It is software,” the foundation concluded. Polkadot is a multichain protocol that had 66 blockchains operating on it and its Kusama parachain network as of October 2022. The Web3 Foundation was founded by Gavin Wood, a co-founder of Ethereum, and released the Polkadot white paper in 2016. Polkadot completed its launch in December 2021 when it rolled out parachains, according to a Medium post.

1/ @Polkadot's native token DOT is, and always has been, co-ordinating software. Following W3F's announcement on DOT morphing into a non-security, read the thread below to learn how DOT was able to morph, what Polkadot is, and the primary goals of the network. pic.twitter.com/sAnU56GnIh

— Web3 Foundation (@Web3foundation) January 26, 2023

“Our experience has been a positive one,” the foundation says in the post. “The SEC has welcomed meetings with the Web3 Foundation, and there has been a spirit of open communication and dialogue.”

Related: Staking on Polkadot, explained

The Web3 Foundation first declared DOT a non-security in November. Its position has apparently not received confirmation from the SEC. The foundation’s argument echoes key points in the SEC case against Ripple. “Morphing” is a concept put forward in a speech delivered by former SEC official William Hinman at the Yahoo Finance All Markets Summit in June 2018.

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