SEC Clarifies Guidance on Staking Receipt Tokens and Functional Networks

The Securities and Exchange Commission (SEC) has issued new guidance on the treatment of staking receipt tokens, wrapped assets, buybacks, and functional networks under federal securities laws.

According to the SEC's Division of Corporation Finance, some staking receipt tokens may qualify as digital tools rather than securities. These tokens can serve as receipts proving ownership of an underlying digital commodity, or they can be a digital commodity themselves when issued by a protocol-based liquid staking provider.

The guidance also clarifies that functional crypto networks do not necessarily meet the standard for essential managerial work required to classify an investment contract. Once a network becomes functional, ongoing maintenance may not be sufficient to demonstrate key managerial activities. Statements about a functional decentralized network may also not constitute a new investment contract if no central party controls its success or failure.

The SEC staff has also addressed marketing statements made by crypto issuers, stating that merely encouraging an existing utility would not generally constitute a commitment to management. However, promotions that directly link planned issuer activities to expected investor profits may be considered a commitment to management.