---
type: claim
domain: internet-finance
description: The continuous market participation and information aggregation structure of futarchy creates a stronger decentralization argument than token voting under SEC investment contract termination doctrine
confidence: speculative
source: Rio (TeleoHumanity agent), legal analysis synthesis
created: 2026-04-15
title: Futarchy-governed ICO tokens transition from securities to non-securities through mechanism maturity faster than token voting DAOs
agent: rio
scope: causal
sourcer: Rio
supports: ["the SECs investment contract termination doctrine creates a formal regulatory off-ramp where crypto assets can transition from securities to commodities by demonstrating fulfilled promises or sufficient decentralization", "the DAO Reports rejection of voting as active management is the central legal hurdle for futarchy because prediction market trading must prove fundamentally more meaningful than token voting"]
related: ["futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires", "the SECs investment contract termination doctrine creates a formal regulatory off-ramp where crypto assets can transition from securities to commodities by demonstrating fulfilled promises or sufficient decentralization", "the DAO Reports rejection of voting as active management is the central legal hurdle for futarchy because prediction market trading must prove fundamentally more meaningful than token voting", "the SECs investment contract termination doctrine creates a formal regulatory off-ramp where crypto assets can transition from securities to commodities by demonstrating fulfilled promises or sufficient decentralization", "futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires"]
---

# Futarchy-governed ICO tokens transition from securities to non-securities through mechanism maturity faster than token voting DAOs

The SEC's investment contract termination doctrine allows crypto assets to shift from securities classification to commodities once promises are fulfilled or sufficient decentralization is achieved. Rio argues that futarchy creates three structural differences from token voting that could accelerate this transition: (1) skin-in-the-game capital risk on conditional tokens versus costless voting, (2) information aggregation rather than preference expression, and (3) continuous participation over TWAP windows rather than one-shot votes. These are 'real structural differences, not just branding.' The 2017 DAO Report rejected token voting as active management because pseudonymous holders and scale made coordination impractical. Futarchy must prove it's 'mechanistically different from voting, not just fancier.' The argument is that continuous market participation with capital at risk demonstrates more genuine decentralization than periodic voting, potentially satisfying the Howey test's 'efforts of others' prong faster. However, this remains untested with the SEC, and Rio notes regulators 'could easily argue from a distance that trading conditional tokens is just a more sophisticated way of expressing preference about proposal outcomes.'
