The US Securities and Exchange Commission (SEC) has revised its approach on how federal securities laws apply to specific digital assets and particular transactions involving cryptocurrency, mirroring a recent move by the Commodity Futures Trading Commission (CFTC).
New SEC guidance for digital assets
On Friday, the SEC updated its frequently asked questions (FAQs) originally released in March, stating that the new guidance is non-binding and does not create or amend any legal obligations. The agency clarified that the FAQ reflects the latest SEC view on when various digital assets may fall within the scope of investment contracts under the Howey test.
The SEC indicated that token issuers could initiate buyback programs for their customers if a crypto system is already functional and operates without a central controlling party. In such circumstances, the absence of a central party overseeing essential managerial efforts would likely mean the tokens are not classified as investment contracts under federal securities law.
The agency also addressed guidance for crypto networks, stating that networks offering functional systems or improvements to system functionality, or providing services that enhance network effects, may not meet the criteria for investment contracts as outlined by the Howey test.
In another clarification, the SEC stated that staking receipt tokens—issued to users who participate in proof-of-stake protocols—might not automatically be considered securities, depending on the circumstances of their issuance and use.
Mini dictionary: Howey test, a legal standard established by the US Supreme Court in 1946, determines whether a transaction constitutes an investment contract subject to securities laws. The test considers if there is an investment of money in a common enterprise with the expectation of profits primarily from the efforts of others.
The SEC clarified that updates to its crypto guidance are non-binding, do not alter existing law, and do not impose new obligations, emphasizing that whether a digital asset qualifies as a security depends largely on whether there is a central entity exercising essential managerial control.
Actions from regulators amid stalled legislative efforts
The SEC’s update comes shortly after the CFTC issued similar advice to digital token issuers. These developments arrive in the wake of the Senate’s failure to pass a bill that would formally establish clearer oversight roles for both agencies in the regulation of the crypto market. SEC Chair Paul Atkins and CFTC Chair Michael Selig both made statements acknowledging their agencies’ intentions to address regulatory gaps while awaiting new laws from Congress.
The CFTC is the federal regulatory authority overseeing derivatives and commodity markets in the United States. The agency has aimed to expand its oversight over the growing digital asset sector, often overlapping with the SEC’s jurisdiction when it comes to defining assets as securities or commodities.
The collaboration between the SEC and CFTC reflects ongoing uncertainty in the US regulatory landscape for digital currencies and highlights the stopgap measures being taken by both regulators in the absence of comprehensive congressional action.
| Regulator | Main Focus | Recent Action |
|---|---|---|
| SEC | Securities, investor protection | Issued updated interpretive guidance for crypto assets |
| CFTC | Commodities, derivatives | Provided guidance for token issuers |
Officials from both the SEC and CFTC signaled a commitment to address crypto regulation independently while awaiting further legislative guidance from Congress.
Hester Peirce’s planned resignation
Commissioner Hester Peirce, who has served at the SEC since 2018 and is widely known in the cryptocurrency sector as “Crypto Mom” for her supportive stance on digital assets, announced plans to step down effective October 2. She intends to join Regent University’s law school as an associate professor beginning in November.
With Peirce’s departure, SEC leadership will consist of Chair Paul Atkins and Commissioner Mark Uyeda, both Republicans, operating on a typically five-member bipartisan panel. As of Monday, US President Donald Trump had not named candidates to fill Peirce’s position or the other two vacant Democratic seats on the Commission.
Peirce’s exit marks a significant change in the regulatory body’s makeup, as the SEC continues to navigate its evolving approach toward digital asset oversight. Industry observers are watching closely to see who will be nominated to fill the vacant roles and how these changes might influence future crypto asset regulation.
