SEC FOLLOWS CFTC WITH NEW CRYPTO GUIDANCE
The U.S. Securities and Exchange Commission (SEC) has updated its staff guidance on how federal securities laws apply to certain crypto assets, providing additional detail on token buybacks, network functionality, staking receipt tokens and trading platforms. The move follows updated guidance from the Commodity Futures Trading Commission (CFTC) and comes as Congress continues to face delays in passing comprehensive crypto market structure legislation. KEY TAKEAWAYS SEC CLARIFIES WHEN CRYPTO ACTIVITIES MAY FALL UNDER SECURITIES LAWS The SEC’s Division of Corporation Finance updated its frequently asked questions to clarify aspects of the agency’s March 2026 interpretation of federal securities laws for crypto assets. The guidance addresses how staff assess whether a token transaction involves an investment contract under the Howey test, which considers whether investors reasonably expect profits from the efforts of others. One area covered is token buybacks. In its September 28 revision, the SEC staff said that an issuer’s announcement of a buyback would not necessarily represent a promise of essential managerial efforts when the crypto system is functional and has no central party. The distinction matters because an issuer’s promises about developing or managing a project can influence whether a token transaction is treated as an investment contract. For a nonfunctional system, a buyback announcement could still raise securities concerns if the issuer presents it as a way to generate yield or returns for token holders. The FAQs also address work performed after a crypto system becomes functional. Activities such as securing, maintaining or improving the network would not necessarily amount to the essential managerial efforts associated with an investment contract. However, the analysis depends on the system’s characteristics and the commitments the issuer has made. STAKING RECEIPTS AND TRADING PLATFORMS RECEIVE CLARIFICATION The guidance discusses staking receipt tokens, which represent ownership of an underlying digital asset deposited with a staking provider or custodian. Under the circumstances described by the SEC, these receipts may qualify as digital tools rather than securities when they simply evidence ownership and do not introduce additional financial rights or benefits. The conditions matter. A receipt issuer must not gain ownership or control of the underlying assets or use them for lending, pledging or other purposes that could expose them to third-party claims. Arrangements that go beyond those conditions require separate analysis. The SEC also clarified that operating a secondary market for a crypto asset does not automatically make a trading platform a promoter. Under the staff’s interpretation, a platform would need to meet the definition of a promoter under Securities Act Rule 405. The guidance does not resolve separate questions about exchange registration, broker-dealer requirements or other applicable obligations. The SEC emphasized that the FAQs represent staff views, not rules formally approved by the Commission. They do not amend existing law, and the agency’s proposed Regulation Crypto Assets, including its proposed investment contract safe harbor, remains subject to the rulemaking process. REGULATORS ACT AS LEGISLATIVE PROGRESS STALLS The CFTC released its own FAQ updates on September 24. Those changes addressed the use of tokenized forms of permitted investments for customer funds and the use of blockchain technology to meet recordkeeping requirements for registered entities. Although the two agencies’ updates cover different issues, both provide guidance on applying existing regulatory frameworks to crypto-related activities. Their actions follow the Senate’s failure to advance the CLARITY Act, legislation intended to establish a broader federal framework for digital asset markets and clarify regulatory responsibilities. Without that legislation, agency interpretations and individual rulemaking proposals remain important sources of direction for companies operating in the sector. The SEC took another step on October 1 by proposing a tailored custody framework for crypto assets held by registered investment advisers and regulated funds. The proposal would expand certain custody options, including conditional use of state trust companies and adviser self-custody in specified circumstances. It remains a proposal rather than a final rule. CONCLUSION The SEC’s updated FAQs provide more detailed guidance on how staff assess token buybacks, functional networks, staking receipts and trading platforms under existing securities law. However, they do not establish a new binding regulatory framework or guarantee that any particular token or activity falls outside securities regulation. For crypto issuers and service providers, the practical task remains assessing the facts of each arrangement, the promises made to investors and the control retained over a network. Further rulemaking and potential congressional action will determine whether the current guidance develops into a more durable framework for the U.S. digital asset market.
SEC, CFTC LEFT WITH THREE COMMISSIONERS AFTER RESIGNATION
The US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are set to have only three active commissioners combined after SEC Commissioner Hester Peirce leaves office on Oct. 2. The reduction comes as both agencies continue shaping cryptocurrency policy while Congress has yet to establish a comprehensive digital asset market structure framework. Peirce’s departure will leave SEC Chair Paul Atkins and Commissioner Mark Uyeda as the agency’s only two commissioners, while CFTC Chair Michael S. Selig remains its sole commissioner. Both commissions are formally designed to have five members. KEY TAKEAWAYS SEC LOSES ANOTHER COMMISSIONER AS CRYPTO POLICY REMAINS ACTIVE Peirce has served on the SEC since January 2018 and became one of the agency’s most prominent voices on digital assets. Her departure will leave the SEC with only Atkins and Uyeda, an unusual configuration for a five-member commission. SEC records confirm Peirce’s term ended with her departure on Oct. 2. The SEC’s work on cryptocurrency regulation has nevertheless continued. The agency has been developing rules and interpretations covering areas such as crypto asset classification, trading platforms and custody. On Oct. 1, for example, the SEC published statements from Atkins and Uyeda concerning proposed changes to custody rules, including crypto asset custody. That means the leadership reduction arrives while the agency is still working on several issues directly relevant to digital asset businesses. CFTC CONTINUES WITH A SINGLE COMMISSIONER The situation is even more concentrated at the CFTC. Selig has served as chairman since December 2025, after being nominated by President Donald Trump and confirmed by the Senate. The CFTC’s official website currently lists Selig as its only commissioner. The CFTC is legally structured around five commissioners, with presidential appointments subject to Senate confirmation. Its rules also limit the number of commissioners who can belong to the same political party. Despite the vacancy, the agency has continued its regulatory work. The SEC and CFTC have also pursued coordination on digital asset oversight, including a joint approach to applying federal securities and commodities laws to certain crypto activities. A March 2026 federal regulatory document recorded Selig as the only CFTC commissioner voting on a joint crypto interpretation, with no commissioner voting against it. CLARITY ACT FAILURE LEAVES REGULATORS WORKING UNDER EXISTING LAWS The leadership vacancies come after Congress failed to enact the Digital Asset CLARITY Act, legislation that sought to establish clearer boundaries between SEC and CFTC jurisdiction over digital assets. Without a new statutory framework, the agencies continue to rely on existing federal law, regulatory rulemaking and staff guidance to address crypto markets. This leaves important questions about the classification and oversight of digital assets to the regulators and, in some cases, future congressional action. The result is a regulatory environment in which the SEC and CFTC can continue operating, but with significantly fewer commissioners participating in formal decision-making. NOMINATIONS REMAIN THE NEXT MAJOR DEVELOPMENT The immediate question is when the vacant seats will be filled. Federal law requires commissioners to be nominated by the president and confirmed by the Senate. The White House has previously submitted CFTC nominations, including Selig’s nomination in 2025, but the current official CFTC roster still shows only Selig serving on the commission. For the crypto industry, future nominations will matter because the composition of both agencies can influence how digital asset rules, enforcement priorities and market oversight develop. CONCLUSION Peirce’s departure reduces the SEC to two commissioners and leaves the CFTC with one, bringing the combined number of active commissioners at the two agencies to three. The vacancies do not stop either regulator from functioning, but they highlight the limited leadership capacity available as US authorities continue developing cryptocurrency policy. With the CLARITY Act no longer providing an immediate legislative framework, the SEC and CFTC remain important players in determining how existing financial laws apply to digital assets. The next major development will be whether and when the vacant commissioner positions are filled.