On September 25, 2026, the Division of Corporation Finance staff of the US Securities and Exchange Commission (SEC) issued FAQs addressing the application of the federal securities laws to crypto assets.
The staff updated the buyback guidance on September 28.1
The FAQs:
- Clarify the SEC's March 17, 2026 interpretive release (the "Interpretive Release"), which included guidance from the Commodity Futures Trading Commission (CFTC).
- Discuss views expressed in the SEC's August 18, 2026 Regulation Crypto Assets proposal.2
- Address issuer communications, ongoing work on functional systems, the assumption of issuer promises, staking receipts and trading platforms.
- Are staff views with no legal force or effect, and the Commission has neither approved nor disapproved them. Regulation Crypto Assets, including its investment contract safe harbor, remains a proposal.
For background on the proposal, see our September 18, 2026 alert.3
Five key points
- Marketing is judged in context. Descriptions of current capabilities, and indefinite aspirational statements about future features that do not promote profit potential, likely would not by themselves be promises of essential managerial efforts.
- Routine support and buybacks do not necessarily constitute essential managerial efforts. Securing, maintaining, improving or enhancing a functional system, or facilitating its network effects, would not involve essential managerial efforts. Announcing a buyback on a functional system with no central party would not be a promise to undertake them either.
- An issuer is measured against its own descriptions. Whether it has delivered the functionality or decentralization it promised turns on how it defined those terms. The SEC's definitions govern classification.
- Assumption of promises does not end the investment contract. A non-security crypto asset does not separate from its investment contract merely because another party assumes the issuer's promises, whether affirmatively or by operation of law.
- Operating a secondary market does not alone establish promoter status. For the analysis addressed in the FAQs, a trading platform is a promoter only if it meets the definition in Securities Act Rule 405.
Marketing and essential managerial efforts
Under the Supreme Court's decision in SEC v. W.J. Howey Co. ("Howey"), an investment contract involves an investment of money in a common enterprise with a reasonable expectation of profits from the efforts of others. The Interpretive Release explains how an issuer's representations or promises to undertake essential managerial efforts can create that expectation in a crypto asset transaction. Explicit, detailed commitments that explain how those efforts will produce profits are more likely to do so.4
FAQ 2.1 applies that analysis to marketing. Promoting a system's current utility and capabilities likely would not, without more, constitute a promise of essential managerial efforts. The same is true of indefinite, aspirational statements about potential utility, features or capabilities, provided those statements do not promote the potential for profit. The answer depends on the facts and circumstances.5
FAQ 2.3 addresses work after a system becomes functional. It cites the Commission's view that securing, maintaining, improving or enhancing a functional system, or facilitating network effects through activities such as sponsoring development projects, would not involve essential managerial efforts. Promises to provide or arrange those services after functionality would therefore not satisfy Howey. The FAQ expressly uses the definition of "functional" in Section III of the Interpretive Release; the system's native crypto asset can be used on the system in accordance with the system's programmatic utility.6
On September 28, the staff revised FAQ 2.5's discussion of buybacks. For a functional system with no central party, an issuer's announcement of a buyback of a non-security crypto asset would not constitute a promise of essential managerial efforts. The revised answer does not resolve the treatment of buyback announcements for functional systems that retain a central party. For nonfunctional systems, the staff continues to say that an announcement could constitute such a promise if the issuer presents the buyback as creating yield or a return for holders.7
These distinctions are relevant to proposed Rule 400. To rely on the safe harbor as proposed, an issuer would have to complete or permanently cease all essential managerial efforts it represented or promised under the covered investment contract, stop making such promises and have no intention of making new ones with respect to the crypto asset. It would also have to file Form TR, including the required certification and supporting analysis. The guidance on maintenance does not eliminate the need to identify and assess all outstanding commitments. Filing Form TR alone would not establish compliance with the safe harbor.8
Functionality and decentralization
FAQ 1.1 distinguishes asset classification from fulfillment of an issuer's promises. The SEC's definitions of "functional" and "decentralized" govern classification under Section III of the Interpretive Release. Whether an issuer has delivered the functionality or decentralization it promised depends on how the issuer defined or described those objectives. Issuers should review the commitments in their white papers and other communications against those descriptions. If the SEC adopts Regulation Crypto Assets as proposed, that review would also need to account for disclosures under Rule 103 and relevant statements in Form NOR.9
FAQ 2.4 qualifies the concern discussed in our earlier alert that new representations after a Form TR filing could create a new investment contract. Where a functional system has no central party, the staff says that issuer statements relating to the system likely would not create a new investment contract, because neither the issuer nor another person has control that would allow it to affect the system's success or failure. The answer does not provide the same assurance for systems that retain a central party.10
Assumption of promises in acquisitions
The Interpretive Release recognizes that a non-security crypto asset may cease to be subject to an investment contract when purchasers would no longer reasonably expect the issuer to fulfill or continue its promised essential managerial efforts. FAQ 2.2 addresses what happens if another party assumes those promises. In that case, the assumption does not cause the asset to separate from the investment contract, whether the assumption is affirmative or occurs by operation of law.11
The FAQ does not determine whether a particular acquisition results in an assumption of promises. That requires analysis of the transaction structure, governing law and the parties' undertakings. Buyers should identify outstanding commitments in offering documents, delayed-delivery agreements, marketing materials and governance communications, and determine whether those commitments remain with the issuer or whether another party would assume them.
Transaction documents should address responsibility for outstanding commitments and allocate any associated exposure, including potential liability for earlier offerings. Depending on the transaction, the parties may consider specific indemnities, escrows or covenants addressing future work. If the SEC adopts Rule 400 as proposed and the parties expect to rely on it, they should also address responsibility for satisfying its conditions and preparing the required filing. An agreement declining to assume promises does not, by itself, establish separation; the inquiry still turns on purchasers' reasonable expectations. Nor would separation eliminate potential liability for earlier misstatements or omissions.12
Staking receipt tokens
FAQ 1.2 says that, under the circumstances described in the Interpretive Release, a staking receipt token that evidences ownership of a digital commodity not subject to an investment contract is a digital tool. It may also be classified as a digital commodity if a protocol-based liquid staking provider issues it. In that case, its value derives from the programmatic operation of a functional crypto system and supply and demand dynamics.13
FAQ 1.3 explains what constitutes a receipt in this context, addressing both staking receipt tokens and redeemable wrapped tokens. A receipt certifies the amount deposited with the issuing depository or custodian and evidences the depositor's ownership. It does not change the underlying asset’s rights, obligations or benefits, or add financial incentives or benefits. Ownership or control does not pass to the receipt issuer, which cannot transfer, lend, pledge, rehypothecate or otherwise use the deposited asset, or subject it to third-party claims.14
Staking providers and investors should compare their arrangements with those conditions. The holder may receive rewards accruing on the underlying asset, but the receipt token does not itself create that entitlement or guarantee or set the rewards. Arrangements that allow the provider to use the deposited assets or offer additional financial benefits require separate analysis.15
Trading platforms and promoter status
For the investment contract analysis, the Interpretive Release uses "issuer" to include affiliates and agents of the issuer or a promoter. FAQ 2.6 says that a platform offering a secondary market is a promoter only if it meets Rule 405’s definition. That definition concerns participation in founding and organizing the issuer's business, or receipt of specified consideration in connection with those activities. The FAQ addresses promoter status; it does not resolve whether a platform could otherwise act as an affiliate or agent.16
Separate questions remain about exchange or broker-dealer registration and compliance with Regulation ATS. The Regulation Crypto Assets proposal does not propose exemptions from the Exchange Act definitions of 'exchange,' 'broker' or 'dealer.' The SEC's September 17, 2026 innovation exemption separately provides temporary, conditional relief for certain venues and liquidity providers engaged in trading tokenized NMS stock; it is not a general exemption for crypto trading platforms.17 The Division of Trading and Markets has issued separate staff FAQs that address, among other things, broker-dealer custody, net capital and the trading of crypto asset securities paired with non-security crypto assets on exchanges and ATSs.18
Practical next steps
Comments on Regulation Crypto Assets are due October 20, 2026. Market participants that rely on these positions may wish to ask the Commission to incorporate or further explain them in any final rules or adopting release, since staff views can change, as the September 28 revision to FAQ 2.5 shows.
Issuers. Review how white papers, marketing and other communications describe promised work and potential returns, and how they define functionality and decentralization. Before announcing a buyback, assess whether the system is functional and has no central party; if it is not functional, avoid presenting the buyback as a source of yield or return.
Buyers. Identify the target's outstanding commitments and whether the transaction would result in another party assuming them, and allocate the resulting exposure in the transaction documents.
Staking providers. Test receipt arrangements against the staff's conditions, particularly whether the provider can use the deposited assets or offers benefits beyond the rewards on the underlying asset.
Broker-dealers, trading platforms, investment advisers and funds. Revisit any analysis that depends on whether a crypto asset is a security, including exchange and broker-dealer registration, custody and Investment Company Act status.
In each case, the answer depends on the specific asset and arrangement.
1 Division of Corporation Finance, Frequently Asked Questions on the Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets (issued Sept. 25, 2026; updated Sept. 28, 2026) (the "FAQs"). SEC FAQs.
2 Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Release Nos. 33-11412; 34-105020 (Mar. 17, 2026), 91 FR 13714 (Mar. 23, 2026); Regulation Crypto Assets, Release Nos. 33-11434; 34-106150 (Aug. 18, 2026), 91 FR 54510 (Aug. 21, 2026) (the "Proposing Release"). Interpretive Release; Proposing Release.
3 White & Case, SEC Proposes "Regulation Crypto Assets" Rulemaking (Sept. 18, 2026).
4 SEC v. W.J. Howey Co., 328 U.S. 293, 298–99 (1946); Interpretive Release, Sections II and IV.A, pp. 12, 24–27.
5 FAQ 2.1.
6 FAQ 2.3 and n.2; Interpretive Release, Section III.A, p. 14 n.49; Proposing Release, pp. 56–57.
7 FAQ 2.5 (updated Sept. 28, 2026).
8 Proposing Release, Section II.D.2, pp. 164–167; proposed 17 CFR 228.400, pp. 353–354; proposed Form TR, Part I, p. 398. Other proposed Form TR filing provisions also apply when Rule 400(a) has not been satisfied; see Form TR, General Instructions (b), p. 398.
9 FAQ 1.1; Interpretive Release, pp. 14 nn.49–50, 29–30 n.96; Proposing Release, proposed Rule 103(a) and (b)(1), pp. 325–326, and Form NOR, pp. 400–401.
10 FAQ 2.4; Interpretive Release, p. 16 n.54 (definition of "central party"). See also the investment contract safe harbor discussion in our September 18 alert, cited in note 3.
11 FAQ 2.2; Interpretive Release, Section IV.B.2, pp. 31–33.
12 Interpretive Release, Sections IV.B.2 and IV.B.3, pp. 31–33; Proposing Release, Section II.D.2, pp. 164–167. The transaction recommendations in this section are practical implications, not requirements imposed by the FAQs.
13 FAQ 1.2 and n.1; Interpretive Release, Section V.B.4, pp. 52–54.
14 FAQ 1.3.
15 FAQs 1.2–1.3 and n.1; Interpretive Release, p. 54 n.131.
16 FAQ 2.6; Interpretive Release, p. 24 n.83; 17 CFR 230.405, definition of "promoter."
17 Proposing Release, p. 73 n.192; SEC, Alternative Trading Systems; SEC, Order Granting Temporary Conditional Exemptive Relief, Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934, Release No. 34-106402 (Sept. 17, 2026), pp. 1–2, 7–8.
18 Division of Trading and Markets, Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology (issued May 15, 2025; last updated Feb. 19, 2026). SEC Trading and Markets FAQs.
19 Proposing Release, p. 2; SEC rulemaking page for File No. S7-2026-27.
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