Howey Test

SEC

2026-10-07 02:53:31

Former federal prosecutor says SEC crypto FAQ is only guidance, not legally binding

Former federal prosecutor Renato Mariotti said the U.S. Securities and Exchange Commission’s crypto asset FAQ, released on Sept. 25 and updated on Sept. 28, should be treated as staff guidance rather than binding law. He said the document may be useful as a reference, but it is not a safe harbor for market participants. The FAQ was issued by the SEC’s Division of Corporation Finance and addresses topics including staking receipt tokens, repurchase programs tied to decentralized networks, and how marketing communications may be evaluated under the Howey test. Mariotti noted that the document does not identify any specific asset or protocol and stays at the level of general principles. He added that the FAQ reflects staff views only, was not formally approved by the Commission, and carries no legal force. With the rule proposed on Aug. 18 still not finalized and the Clarity Act facing obstacles in Congress, companies in the sector still need to make their own judgments on disclosure and token design based on staff commentary.

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SEC

2026-10-01 01:47:09

SEC FAQ lays out nine answers on crypto assets, functional networks and investment contracts

The U.S. Securities and Exchange Commission’s Division of Corporation Finance has issued a new FAQ on how federal securities laws apply to certain crypto assets and related transactions, offering a more detailed view of where the agency sees the line between non-security crypto assets and investment contracts. The document does not carry legal force and is not a formal SEC rule or statement, but it addresses several questions that have remained central to the industry. The FAQ covers how to think about functional and decentralized networks, the classification of staking receipt tokens, the meaning of receipts, when marketing statements may amount to promises of essential managerial efforts, and whether post-functionalization maintenance, upgrades, and network-effect activities still matter under the Howey framework. It also addresses whether a new investment contract can arise in a functional system, how buyback programs should be viewed, and when a secondary-market trading platform could be treated as a promoter. A key thread runs through the entire release: once a crypto system is functional and no longer subject to centralized control, certain ongoing activities by issuers or other participants may no longer count as the kind of essential managerial efforts that support an investment contract analysis. The FAQ also cites Regulation Crypto Assets, Release No. 33-11434, dated Aug. 18, 2026, and the Federal Register citation 91 FR 54510, 54525 dated Aug. 21, 2026.

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SEC

2026-09-30 12:12:12

SEC narrows token buyback relief to crypto networks with no central party

The U.S. Securities and Exchange Commission has sharply narrowed what at first looked like a broad opening for token buyback programs. In an FAQ published on Sept. 25, SEC staff initially said that once a crypto network is functional, announcing a token buyback would not by itself amount to a promise of essential managerial efforts under securities law. Markets read that as a positive sign for revenue-generating protocols that buy back and burn tokens, and Pump.fun’s PUMP rose about 10% the next day. That reading did not last. After criticism from legal experts, the SEC staff revised the language on Sept. 28 to say the position applies only where a crypto system is functional and has no central party. The agency had already defined a central party in a March interpretive release as any person, entity, or group with operational, economic, or voting control of a crypto system. According to Unchained, this change leaves many prominent buyback programs outside the FAQ’s protection. Hyperliquid comes closest because its buybacks run automatically, but validators operated by its foundation hold nearly half of the network’s votes. Other programs mentioned in the analysis, including PUMP, JUP, LINK, AAVE, SKY and LDO, are tied to companies, committees or token-holder governance structures, leaving them in the same case-by-case Howey test limbo rather than inside a clear safe harbor.

500

SEC

2026-09-30 06:46:43

SEC staff FAQ on crypto draws lines around buybacks, staking receipt tokens and post-launch network work

The U.S. Securities and Exchange Commission’s Division of Corporation Finance released a crypto asset FAQ on Sept. 25 that applies the agency’s March framework to several contested scenarios: token buybacks, staking receipt tokens, post-launch development on functional networks, and whether secondary trading platforms can be treated as promoters. The document says the answers reflect staff views only, not formal SEC rules, regulations, or Commission statements, and that the guidance carries no legal force. Still, the FAQ gives the market a clearer picture of what staff will examine when deciding whether an investment contract relationship still exists. The main dividing line is whether a network is already functional. In that setting, a buyback announcement for a non-security crypto asset does not amount to a promise of essential managerial efforts, according to the staff. If the network is not yet functional and the issuer frames the buyback as a way to generate returns for token holders, the analysis can shift. The FAQ also sets a narrow definition for staking receipt tokens, says maintenance and upgrades on a functional network do not fall on the managerial-efforts side of Howey, and states that secondary-market platforms are not promoters unless they meet the existing Rule 405 definition. The result is a framework that puts unusual weight on timing, facts, and issuer language.

460

SEC

2026-09-29 10:01:00

SEC Staff Tighten Token Buyback Guidance, Limiting It to Functional Networks With No Central Party

The U.S. Securities and Exchange Commission’s Division of Corporation Finance revised its crypto FAQ on Sept. 28, narrowing recently issued guidance on token buybacks just three days after first publishing it. The updated answer now applies only where a crypto network is both functional and has no central party. Under the revised staff view, an issuer’s announcement of a buyback program for a non-security crypto asset would not, in that setting, amount to a representation or promise to undertake essential managerial efforts — a factor that can turn a token sale into an investment contract under the Howey test. The rest of the answer was left unchanged. Staff also maintained that on a network that is not yet functional, a buyback announcement could still be treated as such a promise if the issuer presents the program as creating yield or return for token holders. The revision drew praise from a16z crypto’s Miles Jennings, who had criticized the earlier wording. The FAQ, however, reflects staff views only and does not carry legal force or effect, according to the division.

430

SEC

2026-09-28 18:39:09

SEC issues crypto staff guidance after CFTC, outlining how securities laws may apply

The US Securities and Exchange Commission updated its crypto-related FAQ on Friday, laying out how federal securities laws may apply to certain digital assets and transactions involving them. The agency said the interpretation is non-binding, carries no legal force, does not amend existing law, and creates no new obligations. The guidance focuses on digital asset products that could fall under the Howey test for investment contracts. In the update, the SEC said token issuers may run buyback programs for customers if a crypto system is functional and has no central party, a setup that would not necessarily amount to a promise of essential managerial efforts. The agency also said services tied to securing, maintaining, improving, or enhancing a functional crypto network, as well as activities that facilitate network effects, would not automatically satisfy the Howey framework. Staking receipt tokens, it added, would not always be treated as securities. The move came days after the Senate failed to advance the CLARITY Act and shortly after the Commodity Futures Trading Commission released similar staff guidance. On the same day, SEC Commissioner Hester Peirce said she plans to resign on Oct. 2 after eight years at the agency.

370

SEC

2026-09-28 12:13:18

SEC updates crypto FAQ to say buybacks on functional networks do not amount to key managerial efforts

The U.S. Securities and Exchange Commission’s Division of Corporation Finance has updated its cryptocurrency FAQ, clarifying that a token buyback announcement does not amount to a promise of "key managerial efforts" when a network is already functional. The agency also said that maintaining, upgrading, or expanding a functional network, promoting the network’s existing features, or making broad vision statements that do not involve profit do not satisfy the relevant conditions under the Howey test. At the same time, the SEC drew a line for projects whose networks are not yet functional. In those cases, if an issuer markets a token buyback as a source of profit or return for holders, securities laws may still apply. The update was reported by Decrypt and adds detail to how the SEC staff views token-related statements in different stages of network development.

340

SEC

2026-09-28 06:00:58

SEC FAQ narrows the reading on token buybacks and network upgrades

A new FAQ issued by the U.S. Securities and Exchange Commission’s Division of Corporation Finance on Sept. 25 has been widely read as a green light for token buybacks and continued post-launch development. The source article argues that reading goes too far. The FAQ is staff guidance, not a Commission rule, statement, or regulation, and it does not carry independent legal force. Instead, it gives more specific answers within the lifecycle framework the SEC Commission described in March 2026. The key question, the article says, is no longer whether a token is abstractly a security. The focus is whether the asset remains tied to promises made by an issuer in a contract, transaction, or arrangement, and whether buyers still reasonably expect profits from the issuer’s essential managerial efforts. Under the FAQ, a buyback announcement by itself does not automatically create an investment contract if the asset is a non-security crypto asset and the system is already functional. That does not mean all buybacks are outside securities law. The piece also reviews the SEC’s limited clarification on post-launch development, the importance of evidence showing when promised functionality has actually been delivered, and a separate CFTC FAQ update touching tokenized forms of permitted investments and recordkeeping. Its conclusion is narrow: projects received more detailed analytical guidance, not a blanket regulatory pass.

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