The U.S. Securities and Exchange Commission (SEC) staff has released a new question-and-answer guide outlining how federal securities laws may apply to different cryptocurrency activities, including liquid staking tokens, token buybacks, protocol development, and project marketing practices.
The document focuses on situations where crypto-related activities could potentially be considered part of an “investment contract” under securities laws and provides additional guidance on how regulators may evaluate different digital asset structures.
According to SEC Corporate Finance staff, staking receipt tokens that represent ownership of a digital commodity may qualify as “digital instruments” under certain conditions. Meanwhile, liquid staking tokens issued by protocol-based providers may be considered “digital commodities” when they are connected to the programmatic operation of a functional cryptographic system and their value is determined by market supply and demand.
The guidance also addresses token buyback programs, an area that has generated significant discussion across the crypto industry. SEC staff stated that within an already operational cryptocurrency system, announcing a buyback program for a non-security token would not automatically represent the type of managerial effort that investors rely on for profit expectations.
However, the SEC noted that the analysis may differ when a protocol is not yet functional. If a project team promotes buybacks as a mechanism designed to generate returns or profits for token holders, such activity could become one factor considered under the Howey test when evaluating whether an investment contract exists.
The SEC further clarified that maintaining, securing, developing, and improving an established crypto network generally would not be considered “essential managerial efforts.” The guidance also stated that crypto assets themselves may not automatically be securities, but certain sales structures, promotional activities, or arrangements could create an investment contract relationship.
Marketing activities were another focus of the document. SEC staff indicated that explaining current features and use cases of a functioning crypto system would generally not create an investment contract. Similarly, discussing possible future features in broad and non-binding terms would not necessarily represent a promise of managerial efforts unless investors are led to expect profits based on those efforts.
The guidance also discussed crypto systems that are not fully functional and lack centralized control mechanisms. In such cases, later announcements from token issuers may not necessarily create a new investment contract because the issuer or another party may no longer have sufficient control over the network’s success or failure.
Regarding secondary markets, the SEC stated that a trading platform offering a secondary market for a crypto asset would not automatically become a “promoter” simply because it facilitates trading. The platform would need to independently meet the definition of a promoter under Rule 405 of the Securities Act.
The new SEC document provides additional clarity on several long-standing questions within the digital asset industry, particularly around liquid staking, token economics, decentralized protocol development, and the relationship between crypto projects and securities regulations.
Market participants may continue monitoring how this framework influences future SEC interpretations, crypto project structures, token launches, and compliance strategies across the industry.
