The Daily Wolf | The SEC just drew the line on who controls a blockchain

The SEC staff’s stated dividing line is control: as Scott Melker described it, a token is generally treated as a commodity rather than a security only when no central party controls its network. Staff said broad token-holder governance does not generally create a controlling group if participants are unaffiliated and have no separate agreement to act together; similar reasoning may apply when governance operates through a foundation. By contrast, unilateral power over network access, validators, or protocol rules can indicate control. The staff distinguished a network’s functionality from whether it is decentralized, and Melker emphasized that these statements are FAQs from SEC staff, not a new SEC rule.

Binance reported $10.97 billion in withdrawals and $5.7 billion in deposits over 46 hours, leaving about $5.28 billion in net outflows. Melker said deposits were then outpacing withdrawals, which could mean the worst of the outflows had passed, and Binance said roughly 95% of its effective assets had been replenished. Its October 31 reserve snapshot covered 10 tokens, with covered balances backed at a minimum of one to one; the company planned a further snapshot including additional tokens. Separately, Binance’s SAFU fund remained below the level the company had described as ideal or allowed, and no replenishment plan had been announced.

New Jersey’s regulator rescinded its 2023 cease-and-desist order against Coinbase staking and its $5 million penalty on October 30. The rescission was without prejudice, did not decide the merits, and left open the possibility of future enforcement. Coinbase said New Jersey customers would regain access to staking soon. The host viewed recent SEC and federal-government policies as sensible continuations of earlier policies and positive for crypto, but said the scope for further progress is uncertain: election gridlock may make regulators the main route for policy advances, while Democrats could make rulemaking harder for SEC Chair Paul Atkins and CFTC Chair Michael Selig. The host anticipated roughly two years of regulatory tailwinds, with conditions potentially worsening afterward.

BlackRock’s iBit saw $405.3 million in net outflows, its largest daily outflow since June, according to Melker. He also said nearly 70% of the stocks initially selected by OKX for tokenization had opted out. Despite that setback, he expected the project to proceed and succeed.

Mercado Bitcoin paused deposits and withdrawals after wallets on at least 10 chains were emptied in an incident involving about $38 million to $40 million. The company said roughly $11 million had been blocked with industry partners. Chainalysis said it helped coordinate freezes with law enforcement and stablecoin issuers, while the host said the cause remained unclear and there was no indication the incident was AI-related. The host said Bitcoin itself has never been hacked, while exchanges and custody services can be compromised. Efforts to recover stolen funds were welcome, but freezing them also raised questions about crypto’s decentralization.

A malicious claim app appeared in the Solana Dapp Store and requested users’ seed phrases. The host warned that users should never give a seed phrase to an app or another person.