US SEC follows CFTC in staff guidance for crypto

The U.S. Securities and Exchange Commission updated its frequently asked questions to clarify how federal securities laws may apply to certain categories of crypto assets and related transactions. The agency emphasized the staff guidance is non-binding, has no legal force, and does not change existing law, but said the FAQs set out how the SEC would analyze digital-asset products under the Howey test for investment contracts. In the update, the SEC described circumstances where token-related activities would not necessarily constitute securities offerings. The agency said issuers could implement buyback programs for customers where the underlying crypto system is operational and lacks a central party, indicating such arrangements would not automatically represent a promise of essential managerial efforts required to establish an investment contract. The guidance also addressed crypto networks and staking-related tokens. The SEC indicated that systems that are functional and whose services contribute to securing, maintaining, improving or facilitating network effects would not necessarily meet the Howey criteria. Likewise, staking receipt tokens would not always be classified as securities under federal law, according to the staff answers. These SEC clarifications followed similar interpretive guidance issued last week by the U.S. Commodity Futures Trading Commission. Both sets of staff answers were released days after the Senate failed to advance the CLARITY Act, a proposed crypto market structure bill that many observers had expected to define the respective authorities of the SEC and CFTC over digital assets. In statements, SEC Chair Paul Atkins and CFTC Chair Michael Selig signaled the agencies would continue to address crypto regulation in the absence of new legislation. Separately, Commissioner Hester Peirce — a long-serving SEC member known in the crypto community for supportive positions toward digital assets — announced she will resign from the commission effective Oct. 2 and is expected to join Regent University’s law school in November. Her departure will leave the agency led by Chair Atkins and Commissioner Mark Uyeda, with potential vacancies on the bipartisan five-member panel yet to be filled by presidential nominations as of the update.