What Role Do Decentralized Autonomous Organizations (DAOs) Play in Token Classification?

DAOs aim to remove the "efforts of others" prong of the Howey Test by decentralizing control and decision-making among token holders. If a DAO is truly decentralized, with no single entity or core team whose efforts drive profit, its governance token is less likely to be classified as a security.

However, if a core team retains significant control, the security classification remains a risk.