The SEC released new staff guidance clarifying that a crypto token itself does not automatically become a security just because it was once sold through an investment contract.
Key points:
• Once a crypto network is functional, maintaining, improving, or funding development no longer counts as "essential managerial efforts" under the Howey test
• Staking receipt tokens can be treated as digital tools or commodities rather than securities, depending on structure
• The token and the investment contract are separate—a non-security crypto asset can be sold as part of an investment contract without permanently becoming a security
The regulatory question is shifting from "Is this token a security?" to "What is the asset, how does the network work, and how was it sold?"
Caveat: This is SEC staff guidance, not binding law or formal rulemaking. But the regulatory direction is becoming clearer for established networks, staking operations, and crypto builders.
Key points:
• Once a crypto network is functional, maintaining, improving, or funding development no longer counts as "essential managerial efforts" under the Howey test
• Staking receipt tokens can be treated as digital tools or commodities rather than securities, depending on structure
• The token and the investment contract are separate—a non-security crypto asset can be sold as part of an investment contract without permanently becoming a security
The regulatory question is shifting from "Is this token a security?" to "What is the asset, how does the network work, and how was it sold?"
Caveat: This is SEC staff guidance, not binding law or formal rulemaking. But the regulatory direction is becoming clearer for established networks, staking operations, and crypto builders.