The United States Securities and Exchange Commission (SEC) revised its guidelines regarding how securities regulations apply to specific digital assets and associated transactions, trailing a comparable action by the nation’s federal derivatives watchdog from the prior week.
During a Friday update to previously published March FAQs, the commission noted that this fresh perspective on digital asset rules lacks binding authority, possesses “no legal force or effect, [does] not alter or amend applicable law, and [does] not create any new or additional obligations for any person.” These frequently asked questions dictate how the SEC evaluates whether digital asset products satisfy the Howey test for investment contracts.
The SEC explained that token creators might execute repurchase initiatives for users as long as “a crypto system is functional and has no central party,” which would not automatically count as “a representation or promise to undertake essential managerial efforts,” meaning it falls outside the definition of an investment contract pursuant to federal securities statutes.
The regulatory authority published parallel instructions for digital asset networks, stating that an ecosystem that remained “functional, services to secure, maintain, improve, or enhance such a system or its functionality, or to facilitate network effects” would not automatically fulfill the parameters of the commission’s Howey test. Likewise, the organization indicated that staking receipt tokens would not universally be categorized as securities.
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These SEC modifications came on the heels of a comparable action by the Commodity Futures Trading Commission (CFTC), which provided direction to token creators. Both bodies published these staff responses shortly after the Senate did not successfully advance a digital asset market structure act that numerous observers anticipated would delineate the regulatory jurisdictions of both watchdogs over virtual currencies. SEC Chair Paul Atkins and CFTC Chair Michael Selig released official remarks indicating that the respective authorities intend to manage virtual currency oversight independently given the absence of legislative action from lawmakers.
SEC commissioner leaving agency this week
Following an eight-year tenure at the securities regulator, Commissioner Hester Peirce revealed on Friday that she intends to step down on October 2. The official, frequently dubbed “Crypto Mom” across the sector due to her support for pro-digital asset frameworks, is slated to join Regent University School of Law in Virginia as an associate professor come November.
With Peirce stepping away, governance at the financial watchdog will narrow down to Atkins and Commissioner Mark Uyeda. Both individuals serve as Republican commissioners on a bipartisan board traditionally comprising five seats. As of Monday, US President Donald Trump had refrained from naming prospective successors for Peirce or the two vacant Democratic commission positions.
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Originally published at https://cointelegraph.com/news/sec-cftc-staff-guidance-crypto-clarity-fail?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
