SEC and CFTC Update Crypto FAQs on Securities Status and Record-Keeping

The SEC's Division of Corporation Finance updated its FAQs on September 25, clarifying that token buybacks, network upgrades, and marketing statements do not automatically render crypto assets securities. The guidance notes that buybacks for operational networks generally do not constitute investment contracts under the Howey Test, though exceptions exist for non-operational networks. The CFTC also updated its crypto FAQs, permitting futures commission merchants and clearinghouses to invest customer funds in tokenized versions of previously approved assets, provided they meet custody requirements. Additionally, the CFTC confirmed that regulated firms may use blockchain for record-keeping, provided they maintain access to records if the blockchain or its explorer fails.