The long-standing regulatory excuse that allowed governance tokens to exist without capturing value is losing its force, according to the CEO of ScopeLift. As fears of enforcement ease, the tokens may need to actually do something for their protocols—or those protocols could face security problems.
For years, DAOs and their lawyers have argued that governance tokens must remain purely utilitarian. Any effort to give them a claim on fees or revenue, the argument went, would turn them into securities and invite regulators. That posture shaped token design, treasury policy, and how DAOs talked to their communities.
The regulatory calculus is changing
With the regulatory threat receding—at least in key jurisdictions—the logic that kept governance tokens value-free is falling apart. The CEO of ScopeLift says that excuse is fading. If tokens don't capture value, the protocols they govern may struggle to fund the security and development they need.
That's not just a philosophical shift. DAOs that have kept their tokens as pure voting instruments now face a harder question: how do they pay for audits, bug bounties, or full-time contributors when the token itself doesn't accrue any economic value? Without that value, token holders have little reason to care about long-term protocol health.
If governance tokens start capturing value, DAO structures will have to change. Fee switches, revenue sharing, and staking mechanisms—once considered radioactive by legal teams—could become standard. That would give token holders a direct stake in protocol success. It would also create new tensions: who decides how revenue is split? How do you prevent whales from capturing the upside?
Investors, meanwhile, may need to rethink what they're buying. A governance token that only votes has speculative appeal but little fundamental value. A token that captures fees looks more like equity. That could attract a different kind of holder—and a different kind of regulatory scrutiny.
The security argument
ScopeLift's CEO framed the issue as a matter of protocol security. If a DAO can't reward token holders for securing the network, it may be vulnerable to attacks or governance capture. That's a practical concern, not just a legal one. Value capture, in this view, isn't about enriching insiders—it's about aligning incentives so the protocol survives.
Whether DAOs will embrace that shift is another matter. Many have built their entire legal strategy around staying as far from profit as possible. Changing course means new smart contracts, new disclosures, and new conversations with regulators who may not have fully clarified their position.
For now, the CEO's comments point to a broader reassessment. The regulatory excuse is fading. What replaces it—and whether DAOs can adapt without breaking their own governance—remains an open question.
