SEC Offers Clarity on Crypto Regulation with Fresh Guidance

The US Securities and Exchange Commission (SEC) has issued new guidance on crypto regulation in the country, focusing on staking tokens, buybacks, and the Howey Test. The move comes after the failure of the CLARITY Act in the US Senate last month.

The new set of FAQs addresses several long-running questions in the industry, including when tokens may fall outside securities regulation. One notable section deals with Staking Receipt Tokens, which represent ownership of crypto assets deposited for staking. The SEC says that such a token tied to a digital commodity not subject to an investment contract can be considered a digital tool, evidencing ownership of the underlying asset.

The agency also clarified that continuing to secure, maintain, improve, or enhance a functional blockchain network does not constitute essential managerial efforts typically associated with an investment contract under Howey. Additionally, announcing a buyback of a non-security token for a functional crypto system would not amount to a promise of essential managerial efforts, but the answer changes if the network is not yet functional and the issuer markets the buyback as a mechanism designed to generate yield or returns for holders.