US SEC follows CFTC in staff guidance for crypto

The US Securities and Exchange Commission (SEC) updated its policies on how securities laws will apply to “certain types of crypto assets and certain transactions involving crypto assets,” following a similar move by the country’s federal commodities regulator last week.

In a Friday update to the SEC’s frequently asked questions issued in March, the agency said that the latest interpretation of its rules on crypto was non-binding, had “no legal force or effect, [did] not alter or amend applicable law, and [did] not create any new or additional obligations for any person.” The FAQs would apply to how the SEC considers digital asset products falling under the Howey test for investment contracts. 

According to the SEC, token issuers could conduct buyback programs for customers provided “a crypto system is functional and has no central party” that would not necessarily qualify as “a representation or promise to undertake essential managerial efforts,” i.e., not an investment contract under federal securities laws. 

The regulator issued similar guidance for crypto networks, saying that a system that was “functional, services to secure, maintain, improve, or enhance such a system or its functionality, or to facilitate network effects” would not necessarily satisfy the agency’s Howey test. Staking receipt tokens, similarly, would not always classify as securities, according to the agency.

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The SEC updates followed a similar move by the US Commodity Futures Trading Commission (CFTC), which offered guidance to token issuers. Both agencies released the staff answers days after the Senate failed to pass a crypto market structure bill that many had expected to clarify the roles the two financial regulators would have over digital assets. SEC Chair Paul Atkins and CFTC Chair Michael Selig issued statements signaling that the agencies would address crypto regulation in the absence of laws passed by Congress.

SEC commissioner leaving agency this week

After serving at the SEC for eight years, Commissioner Hester Peirce announced on Friday that she planned to resign on Oct. 2. The official, known as “Crypto Mom” by many in the industry for her advocacy of policies favorable to digital assets, is expected to join the law school of Regent University in Virginia as an associate professor in November.

With Peirce’s departure, the leadership of the financial agency will come down to Atkins and Commissioner Mark Uyeda. Both are Republican commissioners on a bipartisan panel that normally consists of five members. As of Monday, US President Donald Trump had not announced any potential replacements for Peirce or the two remaining Democratic SEC seats.

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