On Friday, the United States Securities and Exchange Commission clarified that network upgrades, token buybacks, and promotional statements do not inherently convert a digital asset into a security.
In a revised Frequently Asked Questions publication, the Corporation Finance Division noted that introducing a repurchase initiative for an operational crypto network would not, on its own, cause the related token to fall under an investment contract. On the other hand, this principle might not hold true for a blockchain network that lacks full functionality where creators promote the buyback initiative as a means of generating profit for owners.
The guidance additionally tackled inquiries regarding blockchain initiatives that continue building post-deployment.
As outlined in the FAQ, once a digital ledger ecosystem becomes operational, activities aimed to “secure, maintain, improve, or enhance such a system or its functionality, or to facilitate network effects” fail to constitute the specific category of managerial effort evaluated by the Howey test.
Promoting current utility within a network typically avoids generating that type of expectation as well, and statements concerning upcoming capabilities share this status provided they steer clear of advertising investment returns.
The bulletin re-emphasized that final determinations will continue to rely extensively upon the exact circumstances surrounding every individual situation.
This FAQ expands upon the SEC’s March Interpretive Release concerning the application of securities regulations to virtual assets. The release arrives shortly following the Clarity Act stalling inside the Senate, which forces regulatory bodies to persist operating through current legislation.
In a separate development, the CFTC refreshed its individual digital asset FAQ on Thursday. These latest adjustments indicate that derivatives commission merchants and clearing entities possess authorization to place customer capital into tokenized iterations of previously authorized holdings, provided they satisfy all custody and investment mandates.
Officials at the CFTC also mentioned that supervised organizations are permitted to leverage distributed ledger technology for maintaining logs, though they must retain the capacity to generate those records even if a blockchain network or its associated block explorer experiences an outage.
Originally published at https://www.theblock.co/news/regulation/2026-09-25-sec-crypto-faq-addresses-token-buybacks-network-upgrades-promises-profit-416914.
