SEC Releases Updated Crypto Guidance on Securities Laws and Token Classification

The U.S. Securities and Exchange Commission has issued updated guidance outlining when crypto assets and related activities may fall under federal securities laws. The document addresses token offerings, staking receipt tokens, buybacks, and network upgrades, aiming to give crypto companies a clearer view of when a token could be tied to an investment contract under the Howey test. Released September 25 by the SEC's Division of Corporation Finance, the guidance builds on the agency's March 2026 Interpretive Release. The SEC reiterated that a crypto asset can be treated as part of an investment contract when purchasers invest money with a reasonable expectation of profits derived from the essential managerial efforts of others—the standard courts apply under Howey. The agency said general promotion of a network's current utility or future features typically would not be enough to create an investment contract, particularly if communications do not reference potential profits. The analysis can shift when an issuer makes specific commitments about future work and ties those efforts to buyer returns, which the SEC said may create a reasonable expectation of profit. For networks that have become functional, the SEC indicated that routine activities such as securing, maintaining, or improving the network generally would not amount to the kind of essential managerial efforts required under Howey. The guidance also discusses functional networks without a central controlling party, noting that statements by the original issuer generally would not create a new investment contract in those circumstances because the issuer no longer controls whether the network succeeds or fails. On buybacks, the SEC said that for a functional network, announcing a repurchase of a nonsecurity crypto asset generally would not create an investment contract. A different conclusion may apply if the network is not yet functional and the issuer markets the buyback as a way to generate returns for token holders. The FAQs also address liquid staking. The SEC said a staking receipt token may be treated as a digital tool when it represents ownership of an underlying digital commodity that is not subject to an investment contract. In some cases, a staking receipt token issued by a protocolbased liquid staking provider may instead qualify as a digital commodity. The SEC added that a "receipt" differs from other financial instruments because it serves only as proof of ownership of an underlying asset, and the receipt issuer cannot transfer, lend, pledge, or otherwise use the deposited asset.