Today in Crypto: SEC Staff Clarifies How Crypto Promises Affect Securities Treatment

Across major exchanges, what a crypto issuer promises buyers can affect whether a non-security token is offered as part of an investment contract, SEC staff says.

New answers address marketing, network development, buybacks, staking receipts, and trading platforms.

Token buyers may encounter different securities treatment depending on the promises accompanying an offer, even when the crypto asset itself is not a security.

25, staff in the Securities and venue Commission’s Division of Corporation Finance says promoting a network’s current uses likely would not, on its own, promise essential managerial efforts.

Broad plans for future features likely would not either if they do not promote potential profits.

Under the existing framework, a non-security crypto asset can be offered as part of an investment contract when buyers reasonably expect profits from work the issuer promises to perform.

The difference is between describing what a network does and asking buyers to rely on promised work for returns.

The SEC’s March interpretation says later token sales can also be securities transactions while that investment contract remains connected to the asset.