SEC Staff FAQ Clarifies Howey Test Applies to Digital Assets
The guidance addresses token functionality, staking receipt tokens and investment contracts, while noting that the FAQ reflects staff views and has no legal force.
SEC staff released a frequently asked questions document clarifying how the Howey test applies to digital assets, including token functionality, staking receipt tokens and investment contracts.
The FAQ addresses whether services provided to maintain, improve or develop a network qualify as the “key managerial efforts” used in the test. Once a network is functional, those services typically do not meet that standard, the document says.
The guidance also explains how the SEC’s March interpretive release on digital assets applies to the structures covered by the questions. The clarification is relevant to token issuers, exchanges and investors assessing whether a digital asset or related arrangement may be treated as an investment contract.
The FAQ reflects the views of SEC staff and does not have legal force.
