US SEC issues an update of the crypto asset FAQ to add a new issuer's currency buyback definition

By: September 28th, the United States SEC Finance Department issued a statement onCommon Questions and Answers on Federal Securities Law Applicable to Certain Encrypted Assets and Partial Transactions Related to Encrypted Assets (FAQ)update. It is mentioned that if the encryption system is functional and there is no central control party, a repurchase plan for non-securitized crypto assets announced by the issuer does not constitute a commitment to undertake the necessary regulatory efforts; If the system is not functional and the issuer describes the buyback as generating revenue or returns for the token holder, the buyback announcement may constitute a statement or commitment to undertake the necessary management effort. The FAQ represents only the views of the company ' s finance department staff, is not a SEC rule or formal declaration and has no legal effect.

Below is an update of FAQ:

The responses in this Common Questions and Answers (FAQ) represent the views of the staff of the United States Securities and Exchange Commission (SEC) company's Finance Department, and are not rules, regulations or official statements. The SEC has neither approved nor rejected this document.

Unless otherwise defined here, the terms used in this FAQ are published by SEC on March 17, 2026Explanatory BulletinThe definition in question is the same.

Group I: Issues relating to section III (Classification of crypto assets) of the Explanatory Bulletin

Question 1.1: within the framework of the Explanatory Bulletin, the SEC defines “available functions” and “decentrized”. However, with regard to the statement on whether the distributor has fulfilled its commitment to carry out core business management activities, the Explanatory Bulletin states that: “The issuer's ability to perform functions should be judged by the author's own definition or description of functions available, rather than by the general understanding of functionality availability among the market population”; “Decentreization by the issuer should be judged on its own basis in terms of definition or description of decentrization, rather than the general understanding of decentrization among the market population”.What is the link between the definition of “functional availability”, “decentrization” in the Explanatory Bulletin and “decentroization” of a statement and a description of a “functionality available” when promoting investment contracts?

Response:These official definitions are not relevant to the determination of whether the issuer has fulfilled his or her stated commitment; the issuer establishes its own criteria for reaching a functionally available/decentrized decision as the basis for stating the commitment.However, this definition applies to the classification of crypto assets by the SEC as provided for in section III of the Explanatory Bulletin.

Question 1.2: How is the pledge tokens (Staking Receipt Tokens) classified according to section III of the Explanatory Bulletin?

In the case described in the Explanatory Bulletin, the blogger says:If the pledge certificate is a token of a category of digital goods that are not subject to an investment contract, then the pledge document itself is a digital instrument.As evidence, the core functional function is to prove that the holder has ownership of the lower digital goods.If the pledge certificate is issued by a mobile pledge service provider based on an agreement, it may also be classified as a digital commodity.In this case, the pledge voucher token is deeply bound to a programmable operating mechanism of a functional encryption system whose value derives from the operation of the system while being influenced by the supply-demand relationship.[1]

Question 1.3: The Explanatory Bulletin characterises pledge certificates as tokens and foreclosible packaging coins as"Receipts". What is the difference between a “certificate” and other financial instruments?

Response:A “certificate” in this context is a document certifying that a specified amount of the asset has been deposited into the depositary/custodian who issued it, to demonstrate the depositor's ownership of the asset.A certificate does not alter the rights, obligations and proceeds of a lower-level deposit in an asset and does not provide additional financial incentives or benefits to the holder.Core differences between vouchers and other financial instruments:The document does not transfer the title, right of control to the issuer of the encumbered asset. The issuer is therefore not permitted to transfer, lend, pledge, recommence or otherwise dispose of the deposited asset, nor may it be subject to claims by third parties.

Group II: Issues relating to section IV of the Explanatory Bulletin (crypto assets subject to investment contracts)

Question 2.1The Explanatory Bulletin states: “If the statement or commitment clearly and unequivocally describes the core business management to be performed by the issuer, including sufficient details as to how the issuer has the capability to land the project and how the work of the issuer will result in a reasonably expected profit for the purchaser, then it is easier for such statements or commitments to create a reasonable profit expectation.” Under what circumstances would marketing promotion be considered as a statement or commitment to carry out core business management activities?

Response: Whether marketing promotion constitutes a statement or commitment of this kind needs to be judged in relation to the full set of facts and circumstances.The mere promotion of the current practical value and performance of encryption systems does not generally constitute a statement or commitment to carry out core business management activities without any additional expression.Similarly, the use of broad vision expressions to promote the potential functionality, characteristics and capabilities of encryption systems does not generally constitute a statement or commitment to core business management activities as long as the content of the messages does not promote profitability.

Question 2.2: Section IV.B.2 of the Explanatory Bulletin describes a situation in which an unsecurated, encoded asset that was originally sold under an investment contract will no longer be subject to the investment contract when the buyer has no reasonable expectation that the issuer will be able to perform or sustain its promised core business management.If the original issuer ' s statement and commitment were to be taken over by other subjects, would the non-securities crypto asset be exempt from the corresponding investment contract?

Response: No separation. Whether the subject takes over on its own initiative or is based on statements and commitments made by an automatic distributor to carry out core business management activities, as provided for in the law, assets will not be separated from investment contracts.

Question 2.3The software will continue to evolve, requiring constant maintenance and upgrading; a functional encryption system is available at the same time and may rely on network effects for scale growth.What behaviour can the issuer and other market participants conduct that is relevant to the encryption system and does not constitute a core business management activity when it becomes functional?

The recent view of the SEC is that:When encryption system functionality is available, related services (including financing similar activities such as development projects) to safeguard, maintain, optimize, upgrade the system and its functions or promote network effects are not core business management activitiesSo...The issuer ' s commitment to provide, provide (or arrange for others to provide) such services after the system is online does not meet the Howay test determination criteria.See Rules for the Regulation of Encrypted Assets, Bulletin No. 33-11434 (18 August 2026), p. 56 [Federal Gazette vol. 91, 54510, 54525 (21 August 2026)]

Question 2.4：Can a new investment contract be created to bind the system ' s original crypto assets by a functional encryption system that does not have centralised subjects, where the relevant representations made by the issuer are available?

Response:Once encryption systems are functional and uncentralized, the relevant presentation of the system in the distribution guidelines does not normally create new investment contracts.The reason is that neither the issuer nor any other subject has control over the available encryption system and does not have the capacity to take action sufficient to determine its success or failure.

Question 2.5: Is it possible that the issuer of a non-securities crypto asset may implement a repurchase plan for a variety of purposes, including treasury fund management, reduction in the supply of tokens, destruction of agreed funds and rebalancing of warehouse balances. Does the issuer’s announcement of a repurchase plan for non-securitized assets constitute a commitment to core business management activities?

Response:If encryption system functionality is available and no centralised subject exists, the issuer issues a non-securitized repurchase notice that does not constitute a statement or commitment to carry out core business management activities.However, if encryption systems are not yet available and the issuer promotes repurchase as a way of generating revenue for token holders, the bulletin may constitute a statement or commitment to carry out core business management activities.(updated on 28 September 2026, with the addition of "and no centralised subject";Available against old versions）

Question 2.6: The Explanatory Bulletin states that the term “issuer” includes “associated subjects and agents of the issuer or promoter”.Would a trading platform that provides secondary market transactions for crypto assets be considered a promoter when determining whether there is an investment contract issuance?

Response:Only if the trading platform meets the definition of “extensor” in rule 405 of the Securities Act will a trading platform providing a secondary market for crypto assets be identified as such.

Comment:

The pledge certificate token does not generally have the intrinsic economic attributes or rights. It is used only to prove that the holder has ownership of the lower digital goods and does not confer any other right or obligation on the holder.

[2] The explanation in the draft of the Code for the Regulation of Encrypted Assets quoted in this response is based on the premise that encryption systems “functionally available”. In that context, the term “functionally available” is interpreted as being based on the definition in section III of the Explanatory Bulletin.