The Securities and Exchange Commission’s Division of Corporation Finance has drawn a sharper line between tokens linked to functioning crypto networks and token sales that depend on promises of future managerial work, offering its clearest staff-level guidance yet on buybacks, staking receipts, network upgrades and secondary-market platforms.
In a crypto-asset FAQ published Sept. 25, the division said its analysis turns heavily on whether a crypto system is already functional or remains under development. The guidance also separates the nature of a token from the circumstances of its sale: an asset may fall outside the definition of a security while a sale involving that asset can still be part of an investment contract.
The FAQ does not create new law or binding obligations. The SEC stressed that it reflects the views of Division of Corporation Finance staff rather than the Commission, and does not alter existing statutes or rules. Its practical value lies in showing how staff may approach recurring structures that have become central to crypto markets, particularly token repurchases and liquid staking arrangements.
Functional networks change the buyback analysis
The staff said an issuer’s announcement that it will repurchase a non-security crypto asset does not, by itself, constitute a promise of “key managerial efforts” when the underlying system is functional.
That conclusion gives projects with operating networks more room to use token repurchases as a treasury-management or capital-allocation mechanism without automatically creating the type of expectation associated with an investment contract under the Howey test. The analysis is narrower than a blanket approval of buybacks: the facts surrounding the announcement, the token and the network would still determine the outcome.
For networks that are not yet functional, the language used to market a buyback can carry greater legal weight. SEC staff said a repurchase program framed as a means to deliver “profit” or returns to holders may be viewed as a promise that a managerial group will take actions intended to generate gains. In that setting, the buyback can become part of the overall package of representations that supports an investment-contract analysis.
The distinction places pressure on early-stage projects that promote token appreciation before their networks are operational. A repurchase plan may be less problematic when presented as a routine use of protocol revenue within an already functioning system than when it is promoted as a mechanism designed to lift token prices or enrich holders.
Buybacks have become much more common in 2026. Allium Labs data cited in the supplied reporting put token-buyback spending at roughly $638 million during the first eight months of the year, up from about $366,000 across all of 2024. Hyperliquid and Pump.fun accounted for close to 90% of this year’s total, according to the same dataset.
The figures show how quickly buybacks have moved from an occasional governance proposal to a major token-economics tool. Yet repurchases do not ensure price gains. Separate figures in the supplied reporting showed Jupiter had spent nearly $14 million on buybacks this year while its token remained down about 55% over the preceding 12 months. Lido said in August that it would consider regular buybacks after meeting specified thresholds, including $40 million in annualized revenue.
Receipt tokens must remain genuine receipts
The FAQ also sets demanding conditions for staking receipt tokens seeking treatment as non-security crypto assets. SEC staff defined a “receipt” narrowly: it must show that a specified amount of an asset has been deposited with a custodian while the depositor retains ownership of that asset.
The receipt token cannot alter the rights, obligations or yield of the underlying asset, according to the FAQ. It also cannot provide additional financial benefits or incentives to its holder. Those conditions would limit structures in which a token marketed as a staking receipt carries separate economic rights, embeds enhanced yield or gives the issuer discretion over rewards.
The handling of deposited assets is equally central. SEC staff said the receipt issuer may not transfer, lend, stake, rehypothecate or otherwise use the deposited assets. The assets also must not be exposed to third-party claims.
That framework draws a boundary between a straightforward custody receipt and many yield-generating arrangements associated with liquid staking. A provider that reuses customer deposits to earn extra returns would face a harder path to arguing that its token merely represents ownership of assets held for the depositor.
The staff said a staking receipt token may be treated as a “digital tool” where it functions as a receipt for a digital commodity that is not itself subject to an investment contract. A receipt issued by a protocol-based liquid staking provider may instead be classified as a “digital commodity” where its value is tied to the programmed operation of a functional crypto system and to market supply and demand.
SEC staff added that receipt tokens often lack independent economic attributes or rights. Although a holder may receive staking rewards connected to the underlying digital commodity, the receipt token itself does not create the reward entitlement or determine its amount.
Development work does not necessarily extend an investment contract
The FAQ addresses another persistent question: whether developers’ work after a network launches means token holders continue to rely on a central group’s efforts.
Staff cited recent Commission statements indicating that, once a system is functional, maintenance, upgrades, security work, feature improvements and support for network effects are generally not treated as key managerial efforts for Howey purposes. The position recognizes that active software development can continue after a system becomes operational without necessarily preserving the same relationship that existed during an initial fundraising phase.
SEC staff also said statements by an issuer are less likely to form a new investment contract after a functional network has no central controlling party. The relevant consideration is whether any person retains control or the ability to take actions that determine the system’s success or failure.
The FAQ does not offer a simple route for an original promoter to erase prior obligations by transferring them elsewhere. An investment contract does not detach from a crypto asset merely because another party assumes the original statements or commitments, including through a legal succession, staff said.
Trading platforms are not automatically promoters
Secondary-market platforms also receive a limited clarification. The existence of a venue where a crypto asset trades does not automatically make that platform a “promoter,” according to the FAQ.
Staff said it would apply the Securities Act Rule 405 definition of promoter, focusing on the platform’s actual role rather than simply its operation of a secondary market. The approach leaves room for scrutiny where a venue has a deeper role in organizing, directing or promoting an offering, while avoiding the assumption that every trading service inherits the issuer’s status.
Proposed exemptions face an October deadline
The FAQ points readers to the SEC’s proposed “Regulation Crypto Assets,” published in the Federal Register on Aug. 21 after being released by the Commission on Aug. 18. Public comments are due Oct. 20.
The proposal includes two potential registration exemptions: one for offerings of up to $5 million over four years and another for up to $75 million during any 12-month period. It also outlines a conditional safe harbor intended to address circumstances in which certain crypto assets may no longer be treated as subject to an investment contract.
Together, the proposal and the FAQ point toward a regulatory approach centered on the relationship surrounding a token rather than a permanent label attached to the asset. Projects with functional systems, dispersed control and narrowly designed receipt structures have clearer staff reasoning to consider, while early-stage issuers that promote tokens as vehicles for returns remain exposed to a more demanding securities analysis.
For deeper context on U.S. policy shifts shaping crypto’s future, explore the possible future of crypto regulation in the US.
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