SEC Staff Issues New FAQs On Crypto Asset Classification

What You Need To Know

• The FAQs clarify how the SEC classifies crypto assets under the Interpretive Release’s five-category framework, including that staking receipt tokens may qualify as either “digital tools” or “digital commodities” depending on the circumstances of issuance, and provide a narrow three-part test for what constitutes a “receipt.”
• Promoting current or potential utility of a crypto system through indefinite aspirational statements generally does not constitute a representation or promise to engage in essential managerial efforts, provided the promotional activities do not promote the potential for profit.
• Once a crypto system is functional and has no central party, activities to secure, maintain, improve, or enhance it do not constitute essential managerial efforts, and statements by the issuer likely will not create a new investment contract.