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Taken together, these initiatives reflect the SEC’s broader effort to make the United States a more workable jurisdiction for digital asset businesses and encourage innovation and capital formation in the U.S. market.
On September 25, 2026, the staff of the Security and Exchange Commission’s (SEC) Division of Corporation Finance issued frequently asked questions on the application of the federal securities laws to certain crypto assets and transactions involving them. The FAQs are meant to help market participants apply the commission’s March 17, 2026, Interpretive Release (Release No. 33-11412). The FAQs reflect the views of the staff only and do not have the force of law or create new obligations. They do, however, offer a useful look at how the staff is approaching these questions.
The FAQs are the latest step in an effort the SEC began in March to make the application of the federal securities laws to crypto assets clearer and more workable for market participants. The commission’s March Interpretive Release set out its framework for analyzing crypto assets and investment contracts; in August, the SEC proposed Regulation Crypto Assets, which would create tailored offering exemptions and a conditional safe harbor; and the new FAQs address practical questions arising under the March framework. Taken together, these initiatives reflect the SEC’s broader effort to make the United States a more workable jurisdiction for digital asset businesses and encourage innovation and capital formation in the U.S. market.
These efforts have taken on added importance as Congress has yet to enact broader digital-asset market-structure legislation. The Senate failed to advance the Digital Asset Market Clarity Act on September 15, 2026. While SEC action cannot provide the comprehensive statutory framework contemplated by the Clarity Act, it has continued to use its existing authority to provide greater clarity to market participants and, through proposed rulemaking, more tailored ways to operate under the federal securities laws.
When a Crypto Asset Is a Security – and When an Investment Contract Can End
At a basic level, the FAQs address how the SEC staff determines whether a crypto asset is itself a security and how different types of crypto assets are classified. The FAQs explain that the Interpretive Release’s definitions of “functional” and “decentralized” determine how a crypto asset is classified. Under the Interpretive Release, a crypto system is “functional” when its native crypto asset can be used on the system for its intended programmatic utility. A system is “decentralized” when it operates autonomously without any person, entity or group exercising operational, economic or voting control.
The FAQs also address when a nonsecurity crypto asset that was originally offered and sold as part of an investment contract may later separate from that investment contract. For that analysis, the FAQs look to whether the issuer has fulfilled the promises that gave rise to the investment contract, including what it said would need to happen for the network to become functional or decentralized. In other words, the issuer’s own statements matter.
A recurring theme in the FAQs is that a nonsecurity crypto asset need not remain tied indefinitely to the investment contract through which it was originally sold. The FAQs provide additional guidance on when that relationship can end and when later activities involving the asset may occur without creating a new investment contract.
Staking Receipt Tokens
The FAQs provide additional guidance on liquid staking and, importantly, when a staking receipt token is not itself a security. In liquid staking, a holder stakes a crypto asset through a protocol or service provider and receives a transferable receipt token, allowing the holder to retain liquidity while the underlying asset remains staked. The FAQs state that a staking receipt token representing an underlying digital commodity that is not subject to an investment contract may be treated as a digital tool rather than a security. A staking receipt token issued by a protocol-based liquid staking provider may also be classified as a digital commodity.
In practical terms, a staking receipt token is a token issued to acknowledge the deposit of an underlying nonsecurity crypto asset, such as Ether, for staking. The underlying asset may earn staking rewards, and the receipt token reflects the holder’s interest in the deposited asset and those rewards but does not itself generate or guarantee the return.
For the token to function as a mere receipt or digital tool, rather than as a security, the depositor must retain the rights and benefits associated with the underlying asset. The issuer therefore cannot take ownership or control of the asset or transfer, lend, pledge, rehypothecate or otherwise use it.
Marketing, Network Activity and Buybacks
The FAQs also address activities that could raise investment-contract issues even where the underlying crypto asset is not itself a security.
Promoting a crypto system’s existing utility and capabilities generally would not, without more, amount to a promise of essential managerial efforts. The same is true of aspirational statements about potential utility, features or capabilities, so long as they do not promote the potential for profit.
Once a crypto system is functional, ongoing efforts to secure, maintain, improve or enhance the system, or to facilitate network effects, are not considered essential managerial efforts under Howey. Where a functional system has no central party, statements relating to the system are likewise unlikely to create a new investment contract.
The FAQs take a similar approach to buybacks. Announcing a buyback of a nonsecurity crypto asset does not constitute a promise of essential managerial efforts where the system is functional and has no central party. If the system is not yet functional, however, a buyback announcement could constitute managerial efforts if it is presented as creating yield or a return for token holders.
Finally, merely listing a crypto asset for secondary trading does not by itself make a trading platform a “promoter” whose activities are attributed to the issuer in the investment-contract analysis; the platform must independently meet the definition of “promoter” under Securities Act Rule 405.
Key Takeaways
A key practical takeaway from the FAQs is that the treatment of a crypto asset depends not only on the characteristics of the asset itself, but also on how it is offered, marketed and supported over time.
Issuers should define “functionality” and “decentralization” carefully and consistently in their materials. They should keep descriptions of utility separate from suggestions of profit and take particular care with buybacks and other activities that could be viewed as creating new promises of managerial efforts.
At the same time, market participants should be cautious about concluding that a particular crypto asset or transaction falls outside the federal securities laws simply because it appears to fit within the guidance. The analysis remains highly fact-specific, including the nature of the asset, the promises made in connection with its sale and the continuing activities of the issuer or other participants.
We are actively working on comments on the SEC’s proposed Regulation Crypto Assets and will continue to monitor developments in this area.
For More Information
If you have any questions about this Alert, please contact Stephen Rutenberg, Driscoll R. Ugarte, any of the attorneys in our Securities and Capital Markets Group, any of the attorneys in our Digital Assets and Blockchain Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.
Source: www.duanemorris.com