The US Securities and Exchange Commission (SEC) has updated its policies on how securities laws will apply to “certain types of crypto assets and certain transactions involving crypto assets” following a similar move by the country’s federal commodities regulator last week.
In a Friday update to the SEC’s frequently asked questions issued in March, the agency said That crypto’s latest interpretation of its rules was non-binding, “had no legal force or effect, (did) not change or modify applicable law, and (did) not create any new or additional obligations for any person.” Frequently asked questions about how the SEC treats digital asset products under the Howey test for investment deals will apply.
According to the SEC, token issuers may conduct buyback programs for customers if “a cryptosystem is functional and has no central party” that would not qualify as “a representation or commitment to make necessary managerial efforts,” i.e., not an investment contract. under Federal securities laws.
The regulator has issued similar guidance for crypto networks, stating that a system that “operates, services, secures, maintains, improves, or enhances such system or its functionality or facilitates network effects” will not satisfy the organization’s Howe test. Similarly, receipt tokens will not always be classified as securities, according to the agency.
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The SEC updates follow a similar move by the US Commodity Futures Trading Commission (CFTC), which provides guidance to token issuers. Both agencies released staff responses days after the Senate failed to pass a crypto market structure bill that many had hoped would clarify the role of the two financial regulators over digital assets. SEC Chair Paul Atkins and CFTC Chair Michael Selig issued statements signaling that the agencies will look into regulating crypto in the absence of legislation passed by Congress.
This week the SEC Commissioner left the agency
After eight years at the SEC, Commissioner Hester Pierce announced Friday that she plans to step down on Oct. 2. The official, known to many in the industry as the “crypto mom” for her advocacy of policies favorable to digital assets, is expected to join Virginia’s Regent University law school as an associate professor in November.
With Pierce’s departure, leadership of the financial agency will fall to Atkins and Commissioner Mark Ueda. Both are Republican commissioners on a bipartisan panel that typically consists of five members. As of Monday, US President Donald Trump had not announced a potential replacement for Pierce or the two remaining Democratic SEC seats.
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