SEC Updates Crypto Guidance Amid Congressional Inaction

The US Securities and Exchange Commission (SEC) has updated its guidance on how federal securities laws apply to certain crypto assets and transactions. The agency's move follows similar steps by the Commodity Futures Trading Commission (CFTC), which issued guidance last week.

The SEC emphasized that its new FAQs are non-binding, do not change existing law, and do not create new legal obligations. Instead, they clarify how the agency expects to evaluate digital asset products, particularly where the Howey test could be implicated.

Key takeaways from the updated guidance include token buybacks: if a crypto system is functional and lacks a central party responsible for essential managerial efforts, it may not trigger an 'investment contract' finding. The SEC also stated that activity improving or facilitating network functionality does not automatically satisfy the Howey test.