SEC staff clarifies when staking tokens may avoid securities rules

SEC staff has clarified when staking receipt tokens may be treated as digital tools rather than securities under U.S. law, alongside new answers on wrapped assets, token buybacks, and functional crypto networks.

Summary

• A staking receipt for a digital commodity can qualify as a digital tool under the conditions described by SEC staff.
• A receipt issued by a protocol-based liquid staking provider may instead qualify as a digital commodity.
• Staff said token buybacks on functional networks do not, by themselves, amount to promises of essential managerial work.
• The answers are staff views and create no new legal obligations.

The Securities and Exchange Commission’s Division of Corporation Finance issued the FAQs on Sep. 25 to explain parts of the agency’s March interpretation of federal securities law. The answers describe how the staff would classify certain tokens and assess an issuer’s promises to buyers; they are neither a new rule nor a Commission decision.

For staking receipts, the staff focused on what the token gives its holder. If it serves as proof of ownership of an underlying digital commodity that is not subject to an investment contract, the receipt is a digital tool under the circumstances set out in the March interpretation.

A receipt issued by a protocol-based liquid staking provider may also be classified as a digital commodity when its value is linked to the operation of a functional crypto system and market supply and demand.

When SEC staff treats a staking token as a receipt

In the FAQs, staff described a receipt as proof that a stated amount of an asset has been deposited while the holder retains ownership. It does not change the rights or benefits attached to the deposited asset, or give the holder an added financial benefit.

The issuer of a receipt also cannot use the deposited asset as its own. According to the staff, the issuer cannot transfer, lend, pledge, or otherwise put the asset to use, and the asset cannot become subject to claims by the issuer’s creditors. The explanation applies to the receipt concept used for both staking tokens and redeemable wrapped tokens in the March interpretation.

Although a holder may receive rewards earned on the underlying staked asset, the receipt token itself does not create that entitlement or set the reward amount, the SEC staff said. The distinction turns on the token’s actual rights and the way the underlying asset is held, rather than its name alone.

The agency had addressed a related activity in August 2025. As previously covered by crypto.news, its Corporation Finance staff said certain liquid staking arrangements did not involve the offer or sale of securities when users received tokens documenting ownership of staked assets. The Sep. 25 answers add detail on how those receipts fit into the token categories established by the later interpretation.

How a functional network changes the analysis

The FAQs also address a token that was previously sold as part of an investment contract. In that setting, staff looks at whether buyers can still reasonably expect an issuer to carry out the essential managerial work it promised, rather than assuming the token keeps the same legal treatment indefinitely.

After a crypto system becomes functional, work to secure, maintain, or improve it does not necessarily count as essential managerial work, according to the staff. Its answer includes software upgrades, funding development projects and efforts to help network use grow. An issuer’s promise to continue those services after functionality, on its own, would not satisfy the cited part of the Howey test, staff said.

Functionality depends in part on the promise being assessed. The staff said each issuer’s own description determines whether it has delivered the functionality or decentralization it promised buyers. The definitions in the March interpretation still govern how the SEC classifies a crypto asset, but they do not replace the terms of an issuer’s earlier representations when assessing whether its promised work has been completed.

In March, the SEC and CFTC set out a token framework that distinguished a non-security crypto asset from an investment contract associated with its sale. The interpretation also addressed staking and wrapped assets. The new staff answers deal with narrower questions raised by that framework, including what happens when responsibility for promised work changes hands.

If another party takes over an issuer’s promise to perform essential managerial work, the asset does not separate from the investment contract merely because the party responsible has changed, staff said. By comparison, once a functional network has no central party able to control its success or failure, statements by its original issuer about the network would be unlikely to create a new investment contract, according to the FAQs.

Why token buybacks and marketing remain case-specific

A buyback announcement receives different treatment depending on the network’s state and the issuer’s claims. For a functional crypto system, staff said an issuer’s announcement that it will buy back a non-security token does not amount to a promise to perform essential managerial work. Before a system is functional, however, a buyback could matter if the issuer presents it as a way to produce yield or returns for holders.

The distinction is relevant to an August SEC proposal on crypto offerings, which included a conditional path for an asset to cease being subject to an investment contract once an issuer permanently completed or stopped the essential managerial work it had promised. The proposal described possible rules for qualifying offerings; the Sep. 25 FAQs instead state the Corporation Finance staff’s answers under existing interpretations.

Staff also drew a line between describing a network’s uses and promising work that buyers may expect to produce profits. Promoting functions a system already has would generally not, on its own, be a promise of essential managerial efforts. Broad statements about possible future features would likewise be less likely to count when they make no claim about potential profit. The staff said the result depends on the facts of the communication.

For U.S. trading platforms, listing a token in a secondary market does not automatically make the platform its promoter. The FAQs say a platform would have to meet the existing definition of “promoter” in Securities Act Rule 405 for that label to apply. The SEC said the staff answers have no legal force, do not change federal securities law, and have not been approved or disapproved by the Commission.