The US Securities and Exchange Commission’s Division of Corporation Finance released an update to its crypto asset FAQ on September 28, 2026, building on an original version from September 25 and a pivotal interpretive release in March that classified XRP as a digital commodity.
Key distinctions on classification
EGRAG CRYPTO, a prominent analyst, detailed the implications of the SEC’s updated guidance on social media, noting the document’s impact on the broader legal framework governing crypto assets.
The updated FAQ does not introduce new law but provides detailed staff guidance on how the SEC interprets crypto asset classification. In one notable section, SEC staff clarify that the term “crypto asset” does not automatically mean the asset is an investment contract subject to securities regulations.
SEC staff emphasize that functionality, utility, and decentralization are central in their assessment, and that crypto assets operating on functional networks are not inherently classified as investment contracts.
The March Interpretive Release officially recognized XRP as a digital commodity. This latest FAQ update reinforces that status and clarifies what criteria must be met for a crypto asset to avoid securities classification.
Network functionality and legal thresholds
A critical theme from the revised FAQ is how network functionality affects regulatory assessment. The guidance indicates that once a crypto network achieves a functional and decentralized structure, activities such as securing, maintaining, or upgrading the network do not automatically meet the “essential managerial efforts” criteria under the Howey test.
This distinction is significant because the Howey test is used to determine whether an asset is a security in the US. Removing routine network activities from the scope of “essential managerial efforts” narrows the definition and offers greater regulatory certainty for projects like XRP.
Further, the document specifies that utility-centered promotion does not necessarily create obligations or promises for essential managerial actions. The guidance also clarifies that if a functional crypto system with no central party announces a token buyback, this does not automatically constitute evidence of promised managerial conduct, providing decentralized platforms with increased flexibility.
Operational implications and evolving oversight
The FAQ update follows a series of SEC actions since 2016 aimed at providing further clarity for digital assets. With the March Interpretive Release and the evolving September guidance, the regulatory framework for crypto is becoming more defined, especially regarding assets like XRP. Institutions evaluating XRP now benefit from reinforced staff-level guidance supporting its commodity status under the SEC’s framework.
Regulatory analysts emphasize that monitoring technical indicators, regulatory trends, and investor behavior is increasingly important in today’s fast-moving crypto environment. The meme token market, in particular, showcases rapid shifts driven by internet trends. For example, Fomo App reported a trade involving “Niu Lai” that transformed a $99 investment into roughly $370,000 within a few days. In these volatile markets, tracking investor timing and token selection is crucial. Fomo App aggregates token discovery, trading, social feeds, investor rankings, and real-time notifications on one platform, enabling users to follow both meme token performance and investor actions closely.
The revised FAQ highlights that promotion focused on a crypto system’s current features does not automatically mean the project’s team is making management commitments, especially when the platform is functional and decentralized. This development offers more clarity for decentralized networks operating in accordance with regulatory standards.
