SEC staff declared on Sept. 25 that announcing buybacks of non-security tokens on a functional crypto system does not constitute a promise to undertake essential managerial efforts — a key element of the investment-contract analysis under the Howey test.

The new FAQs, issued by the Division of Corporation Finance, draw a different line for systems that are not yet functional. In those cases, a buyback announcement could constitute such a promise if the issuer presents it as creating yield or returns for token holders.

The answers are nonbinding staff views, not a Commission rule or a change in law. The document states the positions carry "no legal force or effect," and the Commission has neither approved nor disapproved them. Still, the guidance gives issuers and their counsel a clearer read on which activities the staff counts as the essential managerial work underpinning investors' profit expectations.

What does the guidance say about functionality?

The analysis hinges on the SEC's March 2026 interpretive release, which defines a system as "functional" when its native token can be used in accordance with the system's programmatic utility. The FAQs distinguish that definition from a separate question: whether an issuer has fulfilled its own promises. That determination depends on the thresholds the issuer described to purchasers at the point of sale.

For operating protocols, the staff reaffirmed that securing, maintaining, improving or enhancing a functional system does not involve essential managerial efforts. The same holds for facilitating network effects through sponsoring or funding development projects. The FAQs cite the Commission's August Regulation Crypto Assets proposing release, which already set out that position.

The staff also addressed marketing conduct. Promoting a system's current utility and capabilities likely does not, without more, amount to a promise of essential managerial efforts. Indefinite aspirations about future utility receive similar treatment, provided the promotion says nothing about potential profits.

How are liquid staking receipts treated?

The FAQs classify a staking receipt token as a digital tool when it represents a digital commodity that is not subject to an investment contract, under the circumstances described in the March release. A receipt issued by a protocol-based liquid staking provider may also qualify as a digital commodity. Both categories fall outside securities under that framework.

The distinction rests on what the receipt conveys. It evidences ownership of the deposited asset rather than creating additional financial benefits. The FAQs specify the constraints on the receipt issuer:

• The issuer cannot transfer, lend, pledge or otherwise use the deposited asset.
• The issuer cannot expose the asset to third-party claims.
• The receipt itself does not guarantee or set staking rewards.

The March framework describes providers acting as agents rather than deciding whether, when or how much to stake. Providers may deduct agreed fees — fixed fees or a percentage of rewards — but do not guarantee or set the rewards owed to depositors.

The new answers build on the division's Aug. 5, 2025 liquid staking statement, which concluded that the specified activities and receipt-token transactions did not involve securities, subject to its conditions. The Commission's March interpretation superseded the earlier staff positions, and the FAQs now explain where qualifying receipts fit within its asset categories.

What remains a security?

The underlying asset stays decisive. The March release treats a receipt for a digital security, or for a crypto asset subject to an investment contract, as a security itself — meaning liquid staking products wrapping such assets remain within the SEC's jurisdiction.

The operational consequences for protocol teams are concrete: buyback programs on functional networks can proceed without triggering the "efforts of others" prong of Howey, provided issuers avoid framing repurchases as yield generation while the system is non-functional. Liquid staking providers that keep deposited assets untouchable and act as agents can continue under the non-security categories.

Because these are staff views rather than Commission rules, their durability depends on the broader regulatory calendar — including the fate of the August Regulation Crypto Assets proposal, which remains in the comment-and-adoption process.