Frequently Asked Questions on the Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets

(Issued Sept. 25, 2026)

The answers to these frequently asked questions (FAQs) represent the views of the staff of the Division of Corporation Finance. They are not a rule, regulation or statement of the Securities and Exchange Commission. The Commission has neither approved nor disapproved their content. Like all staff guidance, these FAQs have no legal force or effect, do not alter or amend applicable law, and do not create any new or additional obligations for any person.

Unless defined herein, the terms used in these FAQs shall have the meanings ascribed to them in the Interpretive Release issued by the Commission on March 17, 2026.

Group 1: Questions Regarding Section III of the Interpretive Release (Classification of Crypto Assets)

Question 1.1: For purposes of the Interpretive Release, the Commission provided certain definitions of the terms "functional" and "decentralized." However, with respect to whether an issuer has fulfilled its representations or promises to engage in essential managerial efforts, the Interpretive Release states that "…whether the issuer has achieved functionality would be based on how the issuer defined or otherwise described functionality, not a general market conception of what constitutes functionality" and "…whether the issuer has achieved decentralization would be based on how the issuer defined or otherwise described decentralization, not a general market conception of what constitutes decentralization." How do the definitions of "functional" and "decentralized" in the Interpretive Release relate to how an issuer may define or otherwise describe "functionality" and "decentralization" as part of its representations or promises in marketing and promoting an investment contract?

Answer: Those definitions are not relevant to whether an issuer has fulfilled its representations or promises because each issuer determines the thresholds that must be met to achieve functionality and/or decentralization for purposes of its representations or promises. However, those definitions are relevant to how the Commission classifies crypto assets as set forth in Section III of the Interpretive Release.

Question 1.2: How are Staking Receipt Tokens classified for purposes of Section III of the Interpretive Release?

Answer: Under the circumstances described in the Interpretive Release, a Staking Receipt Token that is a receipt for a digital commodity that is not subject to an investment contract is itself a digital tool because it is a receipt that serves a practical function of evidencing the holder's ownership of the underlying digital commodity. However, a Staking Receipt Token also may be classified as a digital commodity if it is issued by a protocol-based Liquid Staking Provider. In these cases, the Staking Receipt Token is intrinsically linked to and derives its value from the programmatic operation of a crypto system that is functional, as well as supply and demand dynamics.[1]

Question 1.3: The Interpretive Release addresses Staking Receipt Tokens and Redeemable Wrapped Tokens and characterizes them as "receipts." What distinguishes a "receipt" from other financial instruments?

Answer: A "receipt" in this context is an instrument certifying that a stated amount of an asset has been deposited with a depository or custodian issuing the receipt and evidencing the depositor's ownership of such deposited asset. A receipt does not change any of the rights, obligations, or benefits of the deposited asset, and does not provide the holder with any additional financial incentives or benefits. A receipt is distinguished from other financial instruments in that it does not transfer ownership or control of the deposited asset to the receipt issuer, such that the issuer cannot transfer, lend, pledge, rehypothecate, or otherwise use the deposited asset for any reason, or subject the asset to claims by third parties.

Group 2: Questions Regarding Section IV of the Interpretive Release (Crypto Assets That Are Subject to an Investment Contract)

Question 2.1: The Interpretive Release states that "…representations or promises are more likely to create reasonable expectations of profit when they are explicit and unambiguous as to the essential managerial efforts to be undertaken by the issuer, contain sufficient details demonstrating the issuer's ability to implement the proposed project, and explain how the issuer's efforts will produce the profits that purchasers reasonably expect." When do promotional and marketing communications constitute representations or promises to engage in essential managerial efforts?

Answer: When promotional and marketing communications constitute representations or promises to engage in essential managerial efforts depends on the facts and circumstances. However, promoting a crypto system's current utility and capabilities likely would not, without more, constitute representations or promises to engage in essential managerial efforts. Similarly, promoting a crypto system's potential utility, features, and capabilities with indefinite aspirational statements likely would not, without more, constitute representations or promises to engage in essential managerial efforts if such promotional activities contain nothing promoting the potential for profit.

Question 2.2: Section IV.B.2. of the Interpretive Release addresses certain circumstances where a non-security crypto asset that was offered and sold subject to an investment contract would no longer be subject to an investment contract if a purchaser would not reasonably expect the issuer to be able to fulfill or to continue to engage in the essential managerial efforts it represented or promised it would undertake. Does the non-security crypto asset separate from and cease to be subject to the associated investment contract where the representations or promises are assumed by another party?

Answer: No, separation would not occur where another party assumes the issuer's representations or promises to undertake essential managerial efforts, whether affirmatively or by operation of law.

Question 2.3: Software is often in a constant state of development because of ongoing maintenance and upgrades. In addition, a functional crypto system may require network effects to grow. After a crypto system is functional, what activities can the issuer and other market participants engage in with respect to the crypto system that would not constitute essential managerial efforts?

Answer: The Commission has recently expressed the view that, once a crypto system is functional, services to secure, maintain, improve, or enhance such a system or its functionality, or to facilitate network effects, whether through sponsoring or funding development projects or other similar activities, would not involve essential managerial efforts. As a result, any representations or promises by the issuer to provide or continue to provide (or arrange for the provision of) such services after the crypto system is functional would not satisfy the Howey test. See Regulation Crypto Assets, Release No. 33-11434 (Aug. 18, 2026), pg. 56 [91 FR 54510, 54525 (Aug. 21, 2026)].[2]

Question 2.4: Where a functional crypto system has no central party, are statements made by the issuer capable of creating a new investment contract to which the native crypto asset is subject?

Answer: Once a functional crypto system has no central party, statements made by the issuer relating to the functional crypto system likely would not create a new investment contract because neither the issuer nor any other person has control of the functional crypto system that would allow them to take any action which would affect the failure or success of the crypto system.

Question 2.5: Issuers of non-security crypto assets may conduct buyback programs for several reasons, including treasury management, supply reduction, protocol-funded burns, and rebalancing. Does an issuer's announcement of a non-security crypto asset buyback program constitute a representation or promise to undertake essential managerial efforts?

Answer: Where a crypto system is functional, an issuer's announcement of a non-security crypto asset buyback program would not constitute a representation or promise to undertake essential managerial efforts. Where a crypto system is not functional, however, such an announcement could constitute a representation or promise to undertake essential managerial efforts if the issuer presents the buyback as creating yield or return for token holders.

Question 2.6: The Interpretive Release indicates that the term "issuer" includes "affiliates and agents of the issuer or a promoter." Would a trading platform that offers a secondary market for a crypto asset be considered a promoter for purposes of determining whether an investment contract is being offered?

Answer: A trading platform that offers a secondary market for a crypto asset would only be considered a promoter if the trading platform met the definition of "promoter" as defined in Securities Act Rule 405.