US SEC Follows CFTC in Issuing Updated Staff Guidance on Crypto Amid Legislative Stalemate
The US Securities and Exchange Commission (SEC) has updated its stance on the application of securities laws to certain types of crypto assets and transactions involving these assets, following closely on the heels of a similar update from the Commodity Futures Trading Commission (CFTC). Both agencies issued these staff guidance clarifications amid a legislative deadlock in the U.S. Senate, which failed to pass a crypto market structure bill that many had anticipated would delineate their respective regulatory roles over digital assets.
SEC Updates Crypto Asset Policy
In an updated FAQ released on Friday, the SEC clarified that its latest interpretations regarding crypto regulations are non-binding, do not alter existing laws, and impose no new obligations on market participants. The guidance focuses on applying the Howey test to digital asset products, determining their classification as investment contracts under federal securities law.
The SEC indicated that token issuers may conduct buyback programs for customers if the crypto system is functional and decentralized, lacking a central party. This implies such buybacks would not necessarily constitute a representation or promise of essential managerial efforts required under securities law.
SEC’s Approach to Functional Crypto Networks and Staking Tokens
The regulator issued similar guidance concerning crypto networks, noting that a system which is functional and aimed at securing, maintaining, improving, or enhancing its operations — or facilitating network effects — would not necessarily meet the criteria of the Howey test.
Regarding staking receipt tokens, the SEC stated that these tokens would not always be classified as securities, signaling a more nuanced approach to different types of digital assets.
Regulatory Context Amid Legislative Deadlock
These SEC updates followed a related guidance release by the CFTC last week. Both agencies issued staff answers in the wake of the U.S. Senate’s failure to pass a crypto market structure bill that many had anticipated would clarify the regulatory roles over digital assets.
Statements from SEC Chair Paul Atkins and CFTC Chair Michael Selig indicated their intention to continue addressing crypto regulation even in the absence of new legislative mandates from Congress.
Departure of SEC Commissioner Hester Peirce
Coinciding with these developments, SEC Commissioner Hester Peirce, known in the crypto industry as “Crypto Mom” for her advocacy of crypto-friendly policies, announced her resignation effective October 2.
Peirce served eight years at the SEC and plans to join Regent University School of Law in Virginia as an associate professor starting November.
With her departure, agency leadership will rest with Chair Atkins and Commissioner Mark Uyeda, both Republican members of the five-person bipartisan panel. As of Monday, there were no announcements from President Donald Trump regarding replacements for Peirce or the two vacant Democratic seats.
Why it matters
These updates from the SEC and similar guidance from the CFTC are significant for the U.S. crypto market as they mark regulators’ efforts to clarify digital asset regulatory frameworks in the absence of new legislation. The legislative failure in the Senate leaves a vacuum that the agencies are stepping in to fill, highlighting their intent to maintain investor protection and market order despite legal ambiguity. The departure of influential Commissioner Hester Peirce may affect the agency’s decision-making dynamics and future regulatory approaches.
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