Key facts
- SEC staff guidance suggests staking receipt tokens may not always be securities.
- Tokens proving ownership of underlying digital commodities may be considered digital tools.
- Functional crypto networks may cease to involve an investment contract if essential managerial work is no longer required.
- Marketing statements linking planned issuer activities to expected investor profits could still constitute an investment contract.
- The SEC has not approved or rejected the staff's FAQ answers.
The U.S. Securities and Exchange Commission's Division of Corporation Finance released new guidance on September 25, offering interpretations on how certain crypto assets might be classified under federal securities laws. The staff's position suggests that some staking receipt tokens, which serve as proof of ownership for underlying digital commodities, may be considered digital tools rather than securities. In instances where a protocol-based liquid staking provider issues such a token, it could also be classified as a digital commodity. The guidance also addresses functional crypto networks, stating that once a system is operational, ongoing maintenance like security work or software updates may not constitute the "essential managerial work" required for an investment contract. Statements about a decentralized network controlled by no central party may also not be considered new investment contracts. Crypto asset buybacks within a functional network are also addressed, with staff indicating they would not necessarily demonstrate key managerial activities. However, buybacks could be treated differently if presented by an issuer as creating yield or returns before a network is functional. Marketing statements by issuers are also covered; general encouragement of existing utility or future features may not be deemed a commitment to management, unless promotions directly link issuer activities to expected investor profits. The guidance clarifies that trading platforms are not automatically considered crypto promoters and must meet the Securities Act definition of "promoter" to be classified as such. It is important to note that the SEC itself has neither approved nor rejected these staff FAQ answers, and the guidance does not impose new legal duties.