SEC Issues Fresh Crypto Guidance on Staking Tokens, Buybacks, and the Howey Test
The SEC has issued new guidance clarifying how crypto staking tokens and buybacks interact with the Howey Test. The guidance suggests that certain staking receipts may not be classified as securities if they do not grant the issuer control over the underlying assets.
Why it matters
This provides much-needed regulatory clarity for crypto developers and investors regarding the legal status of staking protocols.
The failure of the CLARITY Act in the US Senate on September 15 hasn’t deterred the two largest local regulators from trying to clear the air on crypto regulation in the country, with the Securities and Exchange Commission now issuing fresh staff guidance addressing several long-running questions.
The new set of FAQs focuses heavily on when tokens may fall outside securities regulation and what types of issuer activity do or do not create new Howey-related concerns.
One of the more notable sections addresses Staking Receipt Tokens, which represent ownership of crypto assets deposited for staking. The circumstances described by the watchdog indicate that a staking receipt tied to a digital commodity that is not subject to an investment contract can be considered a digital tool since it simply evidences ownership of the underlying asset.
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