A key aspect of the newly approved FIT21, which aims to set a clear regulatory framework including the roles of the CFTC and SEC, is the five-prong decentralization test determining if an asset is a digital commodity or not.
⚫️Prong 1: Power Rule
No single person can control or change the code, or prohibit others from using the system in the past 12 months.
⚫️Prong 2: Ownership and Voting
No issuer or affiliated person can own or direct 20% of the asset or its voting power, and the asset shouldn't include voting power in the past 12 months.
⚫️Prong 3: Code Changes
Code changes must be limited to maintenance, bugs, and vulnerabilities in the past 3 months, or must be adopted through consensus of a decentralized governance system.
⚫️Prong 4: No Marketing as an Investment
Asset must not have been marketed as an investment in the past 3 months.
⚫️Prong 5: Rules of Inflation
Token issuance must be end-user distributions through the blockchain system in the past 12 months.
Full FIT21 bill here.