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
- The SEC updated its crypto FAQs on September 25 and revised its buyback guidance on September 28.
- The staff guidance explains how existing securities laws may apply to functional crypto systems, staking receipts and secondary trading platforms.
- The FAQs are nonbinding and do not change existing law or create new legal obligations.
- The CFTC issued separate staff guidance updates on September 24 covering tokenized permitted investments and blockchain-based recordkeeping.
- The SEC has also proposed new crypto custody rules for investment advisers and regulated funds.
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.
