SEC Just Clarified Something Big for XRP and Crypto

The SEC’s Division of Corporation Finance updated its crypto asset FAQ on September 28, 2026. The update builds on the original FAQ published September 25 and on the landmark March Interpretive Release that classified XRP as a digital commodity.

The update does not carry the force of law. The SEC staff acknowledges as much in the document itself. Still, the guidance sharpens the legal architecture around crypto classification in ways that are significant for XRP.

Functionality Changes the Calculation

EGRAG CRYPTO pulled out a key theme from the FAQ: functionality, utility, and decentralization are central to how the SEC assesses crypto assets. The updated document addresses what happens once a crypto system reaches functional status. At that point, activities to secure, maintain, or improve the network no longer constitute essential managerial efforts under the Howey test.

The Howey test is the legal standard that determines whether an asset qualifies as a security. Removing network maintenance from the “essential managerial efforts” category narrows the path to securities classification for functional networks.

XRP operates on a functional, decentralized network. The March Interpretive Release explicitly named XRP as a digital commodity. The September FAQ reinforces that status by clarifying the criteria that keep a functional network outside investment contract territory.