The U.S. Securities and Exchange Commission staff released guidance Sept. 25 on crypto asset regulation following the CLARITY Act's failure in the Senate on Sept. 15. The Frequently Asked Questions focus on when digital tokens may fall outside securities classification and which issuer activities do not create new concerns under the Howey test.
One key section addresses staking receipt tokens, which represent ownership of crypto assets deposited for staking. The SEC staff indicated that a staking receipt tied to a digital commodity not subject to an investment contract can be considered a digital tool, as it merely evidences ownership of the underlying asset. For a protocol-based liquid staking provider, the token may be classified as a digital commodity depending on the precise rights the receipt conveys.
A true receipt should not transfer ownership or control of the deposited asset to the issuer or permit the issuer to lend, pledge, rehypothecate, or otherwise use the underlying asset.
The guidance clarified that ongoing efforts to secure, maintain, improve, or enhance a functional blockchain network—including funding development or encouraging network effects—do not constitute the type of essential managerial efforts typically associated with an investment contract under Howey. For a functional crypto system lacking a central controlling party, statements made by an original issuer would generally be less likely to establish a new investment contract around the native asset.
Announcing a buyback of a non-security token for a functional crypto system would not, by itself, amount to a promise of essential managerial efforts. This answer changes if the network is not yet functional and the issuer markets the buyback specifically as a mechanism designed to generate yield or returns for holders.
The SEC staff said that simply promoting a network's existing utility or capabilities would generally not establish an investment contract. Even aspirational statements about future features may fall outside this threshold if they do not promote the prospect of profit for token holders.
