SEC staff said functional crypto networks can continue to receive ongoing development and maintenance services without necessarily creating new investment contracts, in a set of frequently asked questions issued Sept. 25 that explain how the agency's March digital asset guidance applies to crypto assets.

The [new FAQshttps://www.sec.gov/about/divisions-offices/division-corporation-finance/faqs-crypto-assets) address token functionality, staking receipt tokens, investment contracts, token buybacks and promotional statements. One question recurs throughout: whether a given activity or statement amounts to an essential managerial effort, the dividing line the staff draws in assessing whether a transaction involves an investment contract. The staff emphasized that the document reflects its views only and carries no legal force or effect.

When a Network Becomes Functional

According to the FAQs, issuers can define functionality and decentralization through their own representations, and those issuer-defined thresholds determine whether promised milestones have been fulfilled — making an issuer's own representations the operative benchmark, and the element to watch as the staff's framework is applied.

Once a network is functional, the SEC staff said it can continue receiving certain services without those services amounting to essential managerial efforts. Such services include securing, maintaining, improving and enhancing network functionality. The guidance also covers activities that support network effects: funding development projects or similar activities would not constitute essential managerial efforts after functionality has been achieved. For projects past that threshold, routine post-launch work can continue without each new commitment being read as a fresh promise of managerial efforts.

Notably, statements about a functional network that operates without a central party would likely not create a new investment contract, with the staff citing the absence of centralized control over the network.

Specific Treatment for Staking Receipt Tokens

The FAQs also explain how staking receipt tokens fit within the March interpretive framework. A receipt for a digital commodity can qualify as a digital tool under certain circumstances.

A staking receipt token may itself qualify as a digital commodity when issued by a protocol-based liquid staking provider, with value that can derive from the programmatic operation of a functional crypto system and from market supply. Under that treatment, the receipt is assessed on its own terms within the framework, apart from the deposited asset.

The staff further outlined what makes an instrument a receipt: it must evidence ownership of deposited assets without changing their rights or benefits. The receipt issuer cannot transfer, lend, pledge, rehypothecate or otherwise use the deposited asset, and third parties cannot claim the deposited asset through the receipt structure — constraints that keep the receipt a passive claim rather than an instrument whose value depends on how the issuer handles the deposited asset.

Different Tests for Buybacks and Promotions

On promotional statements, promoting a crypto system's current utility would generally not constitute an essential managerial promise in the absence of additional factors. Indefinite statements about potential features likewise would not qualify without promotion tied to profit.

The staff separately addressed token buybacks. For functional networks, buyback announcements would not constitute promises of essential managerial efforts. However, buybacks involving nonfunctional systems could qualify as such when issuers present them as creating yield or returns.

Across both sets of scenarios, the assessment turns on the same marker: whether a communication ties potential returns to the issuer's own efforts.

Secondary trading platforms, meanwhile, would only qualify as promoters when they meet the definition set out in Securities Act Rule 405.