U.S. SEC Issues 9 FAQs on Crypto Asset Securities Classification

This article is from:U.S. Securities and Exchange Commission Official Website

Compiled by Odaily Planet Daily (@OdailyChina); Translator: Moni

Editor’s Note: The U.S. Securities and Exchange Commission (SEC) Division of Corporation Finance has released a FAQ on cryptocurrency asset regulation, focusing on issues such as functional networks, staking receipt tokens, token buybacks, and marketing promotions, providing further guidance on when cryptocurrency assets may not be subject to the investment contract framework.

The following content is translated by Odaily Planet Daily.

The U.S. Securities and Exchange Commission (SEC) Division of Corporation Finance has released a FAQ regarding the application of federal securities laws to specific types of crypto assets and related transactions, further addressing unresolved questions from its prior interpretive guidance on crypto assets. Although this FAQ is not an official SEC rule or statement and does not have legal force, it further clarifies the regulator’s understanding of the boundary between “non-securities crypto assets” and “investment contracts.”

From functional networks and staking receipt tokens to token buybacks, marketing efforts, and whether exchanges constitute an “issuer,” this FAQ addresses multiple practical issues long scrutinized by the industry. A key thread is: when a crypto system has become functional and has progressively reduced or eliminated central control, under what circumstances do issuers and other participants no longer constitute “essential managerial efforts” under the Howey test.

It is important to note that the FAQ does not simply address “which tokens are not securities,” but further explains the relationship between specific crypto assets and investment contracts, as well as which activities may no longer subject the relevant assets to the investment contract framework. For the crypto industry, these details may impact token issuance, marketing, network operations, and buyback arrangements by project teams, and also provide new guidance for understanding the boundaries of U.S. securities regulation for crypto assets.

Question 1: The U.S. Securities and Exchange Commission has provided definitions for "functional" and "decentralized." However, regarding whether the issuer has fulfilled its statements or commitments to undertake key managerial efforts, the prior Interpretive Guidance stated: "Whether an issuer has achieved functionality should be judged based on how the issuer defines or otherwise describes functionality, rather than according to what the market generally considers to be functional"; and "Whether an issuer has achieved decentralization should be judged based on how the issuer defines or otherwise describes decentralization, rather than according to what the market generally considers to be decentralized."

What is the relationship between the definitions of “functionality” and “decentralization” in the Interpretive Announcement and how the issuer may define or otherwise describe “functionality” and “decentralization” as part of its representations or commitments in the promotion and marketing of investment contracts?

These definitions are unrelated to determining whether the issuer has fulfilled its statements or commitments, as each issuer independently determines the standards required to achieve functionality and/or decentralization with respect to its statements or commitments.

Question 2: How are staking receipt tokens classified?

If the staking receipt token is a凭证 issued for a digital good that is not subject to an investment contract, then the staking receipt token itself is a digital instrument, as it functions as a凭证 with the practical role of proving the holder's ownership of the underlying digital good.

However, if the staking receipt token is issued by a protocol-based liquid staking provider, it may also be classified as a digital commodity. In this case, the staking receipt token is intrinsically linked to the programmatically operated mechanism of a functionalized crypto system, and its value derives from this mechanism as well as supply and demand dynamics.

Question 3: Involves staking receipt tokens and redeemable wrapped tokens, describing them as "receipts." How do these "receipts" differ from other financial instruments?

A voucher is a tool that proves a specific quantity of assets has been deposited with the custodian or custodial institution that issued the voucher, while also confirming the depositor’s ownership of those assets.

The voucher does not alter any rights, obligations, or benefits associated with the deposited assets, nor does it provide the holder with any additional financial incentives or benefits.

Unlike other financial instruments, tokens do not transfer ownership or control of the deposited assets to the token issuer. Therefore, the issuer may not transfer, lend, pledge, re-pledge, or otherwise use the deposited assets for any reason, nor may these assets be subject to claims by third parties.

Question 4: The previous Interpretive Announcement stated: “...when relevant statements or promises clearly and unambiguously relate to key managerial efforts the issuer will undertake, contain sufficient detail to demonstrate the issuer’s ability to implement the proposed project, and explain how the issuer’s efforts will generate profits reasonably expected by purchasers, such statements or promises are more likely to create a reasonable expectation of profit.” Under what circumstances would promotional and marketing information constitute statements or promises of undertaking key managerial efforts?

Whether promotional and marketing information constitutes a statement or promise of engaging in key management efforts depends on the specific facts and circumstances.

However, merely promoting the current practicality and functionality of a cryptocurrency system may not constitute a statement or promise of engaging in significant management efforts, unless other factors are present. Similarly, if relevant promotional activities do not highlight potential profits but instead only describe the future practicality, functionality, and capabilities of the cryptocurrency system through vague, visionary statements, this also may not constitute a statement or promise of engaging in significant management efforts, unless other factors are present.

Question 5: The Interpretive Guidance previously addressed certain scenarios: a non-security crypto asset that was initially issued and sold within the framework of an investment contract will no longer be subject to the investment contract if purchasers no longer reasonably expect the issuer to perform or continue undertaking the key managerial efforts it represented or promised.

If the issuer’s representations or warranties are assumed by another party, whether voluntarily or by law, will this non-security cryptocurrency asset be separated from the related investment contract and no longer be subject to its terms?

No. If another party assumes the issuer’s statements or commitments regarding key management efforts, whether such assumption is voluntary or required by law, this non-security crypto asset will not thereby be separated from the related investment contract.

Question 6: Software and networks are typically in a state of continuous development due to the need for ongoing maintenance and upgrades. Additionally, a functional crypto system may require growth through network effects. After a crypto system becomes functional, what activities can the issuer and other market participants undertake with respect to that crypto system without constituting key managerial efforts?

The U.S. Securities and Exchange Commission has recently stated that activities providing security, maintenance, improvement, or enhancement services to a cryptocurrency system or its functions, or promoting network effects—whether through initiating or funding development projects or through other similar activities—do not involve essential managerial efforts.

Therefore, any representations or commitments made by the issuer regarding the provision or continued provision (or arrangement for others to provide) of such services after the cryptographic system has been functionalized will not satisfy the Howey test. (See Regulation Crypto Assets, Release No. 33-11434 (August 18, 2026), p. 56 [91 FR 54510, 54525 (August 21, 2026)].)

Question 7: If a functional cryptocurrency system exists without any entity capable of centrally controlling, managing, or substantially influencing the operation and success of that cryptocurrency system, could statements made by the issuer potentially form a new investment contract that subjects the native cryptocurrency asset to the terms of that investment contract?

If a functionalized cryptocurrency system has no entity capable of centrally controlling, managing, or substantially influencing its operation and success or failure, the issuer is unlikely to form a new investment contract, because neither the issuer nor any other party can control the functionalized cryptocurrency system and therefore cannot take any actions that affect its success or failure.

Question 8: Could an issuer’s announcement of a buyback program for non-security crypto assets be interpreted as a promise to investors that “I will generate returns for this project/token through my management and operational actions”?

If the cryptographic system has been functionalized, the issuer’s announcement of a repurchase program for non-security crypto assets does not equate to promising investors, “I will generate returns for this project/token through my management and operational actions.”

However, if the cryptographic system has not yet been functionalized, and the issuer describes the buyback as capable of generating income or returns for token holders, then this buyback announcement may be equivalent to promising investors, “I will generate returns for this project/token through my own management and operational actions.”

Question 9: Previously, the Interpretive Notice stated that the term “issuer” includes “affiliates and agents of the issuer or promoter.” In determining whether an investment contract has been issued, would a platform providing a secondary market for crypto assets be considered a promoter?

A platform providing a secondary market for crypto assets is considered a promoter only if it meets the definition of a "promoter" under Rule 405 of the Securities Act.