Key Takeaways:
The SEC's Division of Corporation Finance released a set of crypto asset FAQs on September 25, 2026, spelling out when a token counts as a security and when it does not.
The Division said token buybacks and post-launch staking services do not count as the essential managerial efforts that make a functional network token a security under the Howey test.
Liquid staking tokens can be treated as receipts or as digital commodities rather than securities, a line the crypto industry has pushed for years.
The SEC's Division of Corporation Finance released a set of frequently asked questions on crypto assets on September 25, laying out when a token counts as a security and when it does not, according to the SEC.
The core idea runs through the whole document. Once a blockchain system is functional and runs without a central party in control, the issuer can no longer spin up new investment contracts around it, because it no longer holds the kind of control the Howey test looks for.
From there the Division answered the questions the market kept asking. A token buyback does not, on its own, count as the essential managerial effort that would turn a functional token into a security, though a buyback pitched as yield for a system that is not yet working can still cross the line. Liquid staking tokens can be treated as receipts, which the FAQs call digital tools, or as digital commodities when they come from protocol-based providers, rather than automatically as securities. Work done after launch to secure, maintain, or improve a network does not count as an essential managerial effort either.
The most notable part of this is the timing. This is the agency using the authority it already has to draw lines through staff guidance, after the CLARITY Act died in the Senate, and it lands the same week Commissioner Hester Peirce, the SEC's most crypto-friendly member, said she will leave on October 2. Uniswap founder Hayden Adams and other crypto figures welcomed the FAQs within hours.
None of this is law, and guidance can shift with the next set of commissioners. What is new is that the agency is putting the lines in writing, in the same lane where WYDE has tracked the CFTC and SEC leaning on their existing authority after the CLARITY Act failed in the Senate. Worth watching whether the next Congress codifies any of it or leaves the market reading FAQs.
People Also Ask
What did the SEC say about token buybacks?
The Division of Corporation Finance said a token buyback does not by itself make a functional network token a security, though a buyback pitched as yield for a non-functional system still can.
Are liquid staking tokens securities?
The SEC FAQs say liquid staking tokens can be treated as receipts or as digital commodities from protocol-based providers, rather than automatically as securities.
What is the difference between a network token and a company-backed token?
A network token draws value from a decentralized protocol that runs without a controlling party, while a company-backed token depends on a central company that can change its value, a distinction a16z crypto has argued shapes securities law.
Do the SEC crypto FAQs have the force of law?
No. They are staff guidance from the Division of Corporation Finance, not a rule or a statute, so they can change under future SEC leadership.
Sources: SEC Division of Corporation Finance, a16z crypto.