SEC Clarified Howey Test Standards for Digital Assets
New agency guidance helps investors assess whether digital assets qualify as investment contracts under federal law.
Updated on Sept. 25, 2026 in Investing
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SEC staff released a frequently asked questions document on September 25, 2026, to clarify how the Howey test applies to digital assets. The guidance addresses technical scenarios, including token functionality and staking receipt tokens.
Why it matters
This documentation provides a framework for investors and market participants to evaluate whether specific digital assets constitute investment contracts. It clarifies the criteria for identifying key managerial efforts within a functional network.
The SEC staff guidance serves as an update to the framework established in the March 2026 interpretive release. It clarifies how assets are categorized for the entire U.S. digital asset market, though the legal weight of these interpretations remains subject to future court rulings.
The players
Securities and Exchange Commission
The federal agency responsible for regulating securities markets and protecting investors through enforcement and rulemaking.
The details
The document details when network-related services no longer qualify as key managerial efforts, a core component of the Howey test. Once a network reaches functionality, services aimed at maintenance or improvement may not meet the threshold for creating an investment contract. This distinction assists participants in assessing the regulatory standing of various token structures and staking arrangements.
Timeline
March 2026: The SEC published an interpretive release on digital assets.
September 25, 2026: SEC staff released the frequently asked questions document.
Money Landscape
This release follows the agency's March 2026 interpretive efforts to bring clarity to the digital asset sector. It marks an ongoing shift toward defining which digital instruments fall under existing federal securities oversight frameworks.
Investors should use this guidance to evaluate the structural risks associated with holding various digital assets. Consult with a qualified financial or tax professional to understand how evolving regulatory definitions may impact your broader investment portfolio.
The takeaway
The SEC staff guidance offers a clearer look at how the Howey test applies to specific digital asset mechanisms like staking tokens. Keep this document in mind when reviewing the risk profile of assets in your account and discuss any concerns with a financial professional.
Further reading
For more on managing portfolio risks in changing markets, see our Investing section.
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Do you believe increased SEC regulatory clarity is beneficial for the digital asset market?
