SEC Updates Crypto Guidance to Align with CFTC Approach

The US Securities and Exchange Commission (SEC) has updated its guidance on how federal securities laws may apply to certain crypto assets and transactions, aligning with a similar move by the Commodity Futures Trading Commission (CFTC). The update was made to FAQs originally issued in March, which are non-binding and do not change existing law or create new legal obligations. Instead, they clarify how the SEC expects to evaluate digital asset products.

One notable area covered by the SEC is token buyback programs. According to the agency, issuers can conduct customer buybacks without triggering an 'investment contract' finding, provided a crypto system is functional and has no central party responsible for essential managerial efforts.

The SEC also addressed how it may view crypto networks, stating that a system providing services such as securing, maintaining, improving, or enhancing the system would not necessarily meet the Howey test. This guidance is significant because network-focused development and operational support are common components of crypto projects.