SEC Updates Crypto Guidance After CLARITY Act Vote Fails

The Securities and Exchange Commission updated its crypto guidance after the Senate failed to advance the CLARITY Act, outlining how federal securities laws may apply to token issuers and related transactions.

The SEC’s updated frequently asked questions, issued Friday, address crypto products evaluated under the Howey test, the legal framework used to determine whether a transaction involves an investment contract.

The staff guidance says a token issuer’s buyback program may not necessarily involve an investment contract when a crypto system is functional and has no central party. It also says activities that secure, maintain, improve or expand a functional network may not necessarily meet the test for an investment contract.

Staking receipt tokens likewise may not always be classified as securities under the SEC’s interpretation.

The agency said the FAQs are nonbinding and do not have legal force or effect. They do not amend applicable law or impose new obligations.

The update follows similar staff guidance from the Commodity Futures Trading Commission as both agencies address crypto regulation while Congress has not passed a market-structure law clarifying their roles.