SEC’s September 2026 Crypto FAQs: What Token Issuers, Developers, and Exchanges Need to Know
On September 25, 2026, the staff of the Securities and Exchange Commission’s Division of Corporation Finance issued new Frequently Asked Questions addressing the application of federal securities laws to crypto assets and crypto-related transactions. The FAQs provide important additional guidance on the SEC’s March 2026 interpretive release concerning crypto assets, including how the SEC views ongoing protocol development, marketing communications, token buybacks, staking receipt tokens, and the circumstances in which a crypto asset may cease to be subject to an investment contract.
As always, it is important to note the FAQs are staff guidance rather than a rule or formal statement of the Commission and therefore have no independent legal force or effect. Nevertheless, they provide significant insight into how SEC staff currently analyze crypto projects under the federal securities laws.
Functionality Is Increasingly Important to the SEC’s Analysis
One of the most consequential themes in the FAQs is the distinction between a crypto system that is still being developed and one that has become functional.
The SEC’s March interpretive release explained that a non-security crypto asset may nevertheless be offered and sold as part of an “investment contract” where purchasers invest based on representations or promises that an issuer will undertake essential managerial efforts from which purchasers reasonably expect profits.
The new FAQs clarify what happens after those promised efforts have been substantially completed.
According to the staff, once a crypto system is functional, continued work to “secure, maintain, improve, or enhance” the system generally does not constitute the type of essential managerial efforts contemplated by the Howey test. The same is true of efforts to facilitate network effects, including sponsoring or funding additional development.
This distinction could have significant consequences for mature crypto projects. The mere fact that developers continue maintaining or improving a blockchain or protocol does not necessarily mean that token holders remain dependent upon their managerial efforts for purposes of the securities laws.
Importantly, however, the SEC does not necessarily determine whether an issuer has fulfilled its promises of “functionality” or “decentralization” by applying an abstract industry standard. Instead, the FAQs explain that the relevant benchmark may be the issuer’s own representations. In other words, projects should pay close attention to how they describe their development milestones because those representations may later determine whether the promised managerial efforts have been completed.
Marketing a Crypto Project Does Not Automatically Create an Investment Contract
The FAQs also provide useful guidance regarding promotional statements made by crypto projects.
Under the SEC’s framework, marketing communications can contribute to an investment contract where they create a reasonable expectation that purchasers will profit from the issuer’s future managerial efforts. But the staff now makes clear that not every discussion of a project’s future development has that effect.
Promoting a crypto system’s existing utility and capabilities, standing alone, generally would not constitute a promise to undertake essential managerial efforts. The staff similarly states that indefinite or aspirational descriptions of potential future utility, features, and capabilities generally would not create such a promise where the communications do not promote the potential for profit.
This provides projects considerably more room to communicate about product development than a broad reading of Howey might otherwise suggest.
The distinction remains highly fact-specific, however. Detailed promises concerning future development—particularly where expressly connected to token appreciation or investor returns—present a materially different securities-law risk than general discussions of potential functionality.
For issuers and developers, the practical lesson is straightforward: how a project communicates about its token and its future development can matter as much as the underlying technology itself.
Continued Development Does Not Necessarily Prevent an Investment Contract From Ending
The FAQs reinforce another important principle from the SEC’s 2026 interpretive framework: a crypto asset that was originally sold pursuant to an investment contract does not necessarily remain subject to that investment contract indefinitely.
A functional blockchain or protocol may continue receiving software upgrades, maintenance, security work, and ecosystem development without those activities necessarily constituting essential managerial efforts.
That distinction is particularly significant for projects that initially raised capital to build a network but have since delivered the functionality they promised.
The staff also addressed what happens when responsibility for the promised managerial efforts changes hands. If another party assumes the issuer’s representations or promises to undertake those efforts, the investment contract does not simply terminate because the original issuer stepped away. The relevant economic relationship continues where purchasers remain dependent on someone to perform the promised essential managerial efforts.
Conversely, once a functional crypto system has no central party, the staff states that subsequent statements by the original issuer generally would not create a new investment contract where neither the issuer nor another person controls the system sufficiently to affect its success or failure.
Token Buybacks Are Not Inherently Securities Transactions
The FAQs also address a question of substantial practical importance: whether announcing a token buyback program can itself amount to a promise of managerial efforts supporting an investment contract.
The SEC staff distinguishes between functional and non-functional systems.
Where a crypto system is already functional, the staff states that an issuer’s announcement of a buyback of a non-security crypto asset would not constitute a representation or promise to undertake essential managerial efforts. That conclusion can apply to buybacks conducted for treasury management, supply reduction, protocol-funded burns, rebalancing, and similar purposes.
The analysis may be different before a system becomes functional. If an issuer markets a buyback as a mechanism for generating yield or returns for token holders while the system remains under development, the announcement could contribute to an investment-contract analysis.
Accordingly, projects considering token buybacks should evaluate not merely the mechanics of the transaction, but also how the buyback is described to token holders and the market.
The SEC Clarifies the Treatment of Liquid Staking Tokens
The FAQs also provide additional clarity regarding staking receipt tokens.
A staking receipt token generally represents a holder’s deposited crypto asset while that asset participates in protocol staking. Under the SEC’s latest framework, where the underlying asset is a digital commodity that is not subject to an investment contract, the receipt token may itself constitute a non-security “digital tool” because it performs the practical function of evidencing ownership of the deposited asset.
The staff also recognizes that a staking receipt token may itself qualify as a digital commodity where it is issued by a protocol-based liquid staking provider and derives its value from the programmatic operation of a functional crypto system.
Critically, the SEC emphasizes what makes something a true “receipt.” The instrument must merely evidence ownership of the deposited asset without changing the holder’s underlying economic rights or providing additional financial incentives. The issuer also cannot obtain the right to lend, pledge, rehypothecate, transfer, or otherwise use the deposited asset.
That limitation cannot be overlooked. Calling a token a “receipt” will not control the securities-law analysis if the arrangement actually transfers economic control of the underlying assets or creates additional financial rights.
Secondary Trading Platforms Are Not Automatically “Promoters”
The staff also addresses whether a crypto trading platform that creates a secondary market for a token should be considered a “promoter” of the token for purposes of determining whether an investment contract exists.
The answer is no—not merely because the platform provides a secondary market.
Instead, the platform would need to satisfy the definition of “promoter” under Securities Act Rule 405. The analysis there is whether the platform took initiative in founding or organizing the business of an issuer. If not, they are unlikely to be a promoter.
This clarification is key for exchanges and other intermediaries because it rejects the proposition that facilitating secondary trading alone necessarily makes the platform part of the issuer’s investment-contract relationship.
What the New FAQs Mean for Crypto Companies
Taken together, the September 25 FAQs continue a broader shift in the SEC’s treatment of crypto assets. Rather than treating a token’s regulatory status as permanently fixed by the circumstances surrounding its initial distribution, the SEC’s current framework places substantial weight on the economic relationship that exists at a particular point in time.
For crypto companies, several practical consequences follow.
The first is that development milestones matter. Projects should carefully document when promised functionality has been achieved and distinguish essential pre-launch development from routine post-launch maintenance and improvements.
This leads to the second point, which is that marketing remains a critical focus. Statements concerning expected profits and the issuer’s future efforts can materially affect the Howey analysis, while descriptions of existing functionality and genuinely aspirational product development may not.
In the same vein, buybacks require context. Buybacks involving functional systems are not inherently indicative of an investment contract, but linking buybacks to promised yield or returns during the development stage may create additional securities-law risk.
With respect to staking structures, the Commission is clear these should preserve the receipt relationship. Liquid staking and similar arrangements should be analyzed carefully where an intermediary obtains discretion over deposited assets or provides economic benefits beyond those associated with the underlying asset.
All of this is to say: a project’s regulatory posture can change over time. An asset originally distributed as part of an investment contract may later separate from that investment contract once the promised essential managerial efforts have been completed, such as achieving a pre-described decentralization or functionality.
The latest FAQs therefore reinforce an increasingly important point for the digital asset industry: the securities-law analysis turns not simply on what a token is, but on the surrounding transaction, the issuer’s representations, the state of the underlying network, and the economic relationship between the relevant parties.
For projects that launched under earlier regulatory uncertainty, the SEC’s evolving framework may warrant revisiting prior securities-law analyses in light of the network’s present functionality, decentralization, marketing, and token economics.
Kelman PLLC advises cryptocurrency companies, founders, investors, and other digital asset market participants on regulatory matters involving the federal securities laws and other aspects of U.S. cryptocurrency regulation. If you believe we can assist, schedule a consultation here.
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