SEC Staff Clarify When Crypto Tokens May Fall Outside Securities Rules

SEC Division of Corporation Finance staff issued nine crypto-asset FAQs that clarify how functionality, managerial efforts and token structures may affect whether digital assets fall within U.S. securities laws.

The FAQs, issued Sept. 25 and updated Sept. 28, say services that secure, maintain, improve or enhance a functional crypto system generally would not count as the essential managerial efforts central to an investment-contract analysis. Marketing a system’s current utility also generally would not create that obligation without additional promises, while future-utility promotion may receive similar treatment when it does not promote profits.

The guidance addresses staking receipt tokens tied to digital commodities that are not subject to investment contracts. Those tokens may qualify as digital tools, while receipts issued by protocol-based liquid-staking providers may be treated as digital commodities when linked to a functional system’s programmatic operation.

A receipt must represent ownership of deposited assets without changing their rights or benefits. Under the described structure, the issuer cannot transfer, lend, pledge, rehypothecate or otherwise use those assets.

For a functional system with no central party, a buyback announcement generally would not promise essential managerial efforts. A buyback tied to yield or returns could raise a different issue for a nonfunctional system.

The FAQs state that they reflect staff views, were not approved or disapproved by the commission, and do not establish binding law or create new obligations.