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.