SEC staff FAQ treats a staking receipt as a digital tool

The staff of the Division of Corporation Finance, in frequently asked questions updated on September 28, 2026, treat a staking receipt for a digital commodity outside an investment contract as a digital tool, and a protocol liquid-staking receipt as a possible digital commodity. The text is staff guidance only. That instrument is already a custody question under the Markets in Crypto-Assets Regulation (MiCA), a United Kingdom arranging activity from October 25, 2027, and a Singapore retail restriction, while the 2023 Kraken order still sits on intermediaries that take control.

Release Nos. 33-11412 and 34-105020, File No. S7-2026-09, took effect on March 23, 2026. The staff answers apply that Securities and Exchange Commission (SEC) interpretation. The Commodity Futures Trading Commission (CFTC) joined the March text and said it would administer the Commodity Exchange Act consistently with it. The FAQs were issued on September 25, 2026 and revised on September 28, 2026. They do not amend the release. What follows sets out the receipt test, the buyback sentence added on September 28, the split with MiCA custody liability, the United Kingdom arranging activity, Singapore’s retail staking bar, and the Kraken settlement that still reaches an intermediary which takes control of staked assets.

Key facts

• FAQs issued September 25, 2026 and updated September 28, 2026. Staff views only, not a Commission rule (SEC staff FAQ).
• Terms come from Release Nos. 33-11412 and 34-105020, effective March 23, 2026, File No. S7-2026-09 (interpretive release).
• Question 1.2: a staking receipt is a digital tool if it evidences a digital commodity outside an investment contract, or a digital commodity if a protocol liquid-staking provider issues it.
• February 9, 2023: Payward Ventures, Inc. and Payward Trading Ltd. agreed to pay $30 million. Advertised annual returns were as much as 21% (Press Release 2023-25).
• PS-G03 paragraph 3.7.1(c), in force October 4, 2024, bars retail staking facilitation. Article 75 of Regulation (EU) 2023/1114 is the EU custody gateway.

Methodology and sources

The propositions below come from primary texts: the Division of Corporation Finance FAQs of September 25 and September 28, 2026, and the interpretive release of March 17, 2026, effective March 23, 2026, Release Nos. 33-11412 and 34-105020, with the fact sheet and Press Release 2026-30. The September 28 comparison file records the buyback edit. Comparison uses European Securities and Markets Authority (ESMA) Q&A 2067 of June 20, 2024, Q&A 2607 of July 9, 2025, Articles 70 and 75 of Regulation (EU) 2023/1114, Monetary Authority of Singapore (MAS) Guidelines PS-G03, Financial Conduct Authority (FCA) PERG 18.10 updated September 16, 2026, the FCA gateway of September 30, 2026, and Securities and Futures Commission (SFC) circular 25EC22 of April 7, 2025. See the regulation desk.

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What the staff FAQ says a staking receipt is

The FAQ states that the answers are not a rule, regulation or statement of the Commission, that the Commission has neither approved nor disapproved them, and that they have no legal force or effect. Question 1.1 splits two uses of “functional.” The release, as quoted there, says functionality “would be based on how the issuer defined or otherwise described functionality, not a general market conception of what constitutes functionality.” Issuer thresholds decide whether a promise was kept. Section III decides classification.

A staking receipt, on the staff reading, is a receipt for a digital commodity that is not subject to an investment contract, and the Division of Corporation Finance treats that receipt as a digital tool because it evidences the holder’s ownership. Question 1.3 defines a receipt as an instrument certifying that a stated amount of an asset has been deposited and evidencing the depositor’s ownership. The receipt must not change the rights of the deposited asset, must not add financial incentives, and must not transfer control, so the issuer cannot lend, pledge, rehypothecate or otherwise use the asset, or subject it to third-party claims. Footnote 1 states that rewards may accrue on the underlying commodity, but the staking receipt does not create, guarantee or fix that amount. The fact sheet for Release No. 33-11412 describes digital tools, which are not securities, as assets that perform a practical function, such as a title instrument. The answers are not a Commission rule and have no legal force.

Question 1.2 states the fork in the staff’s own words: a staking receipt token for a digital commodity not subject to an investment contract “is itself a digital tool,” and it “may be classified as a digital commodity if it is issued by a protocol-based Liquid Staking Provider.” The fact sheet ties that commodity label to value from “the programmatic operation of a crypto system that is ‘functional,’ as well as supply and demand dynamics.” Footnote 1 says the receipt does not “set or fix” rewards.

Question 2.3 cites proposing release No. 33-11434 (August 18, 2026), page 56: once a system is functional, securing or improving it is not an essential managerial effort. The FAQ says that passage is a proposal, and that “functional” takes the Section III meaning. Question 2.1 adds that profit expectations are more likely where statements are “explicit and unambiguous” about those efforts. Promoting current utility “likely would not, without more.”

“Where a crypto system is functional and has no central party, an issuer’s announcement of a non-security crypto asset buyback program would not constitute a representation or promise to undertake essential managerial efforts. Where a crypto system is not functional, however, such an announcement could constitute a representation or promise to undertake essential managerial efforts if the issuer presents the buyback as creating yield or return for token holders.”

— Staff of the Division of Corporation Finance, Securities and Exchange Commission (SEC staff FAQ, Question 2.5, updated September 28, 2026)

September 28 added “and has no central party,” so functionality alone no longer covers a buyback. Question 2.4 says later statements “likely would not create a new investment contract” once no central party remains. Question 2.2 says a successor who assumes the promises “by operation of law” does not end the contract. Question 2.6 limits “promoter” to Securities Act Rule 405, which the FAQ does not restate.

How four jurisdictions split the same staking receipt

Sources: SEC staff FAQ; Release Nos. 33-11412 and 34-105020; ESMA Q&A 2067; Regulation (EU) 2023/1114; FCA PERG 18.10; MAS PS-G03. Last updated: October 1, 2026.

The United States, the European Union and Singapore do not ask the same question of a staking receipt. Staff FAQ Question 1.2 classifies a receipt for a digital commodity outside an investment contract as a digital tool, and it allows a protocol-based liquid-staking provider’s receipt to be a digital commodity where the token is linked to a functional crypto system and to supply and demand. The European Commission’s answer of June 20, 2024, in European Securities and Markets Authority (ESMA) Q&A 2067, states that MiCA does not prohibit staking and does not license it as such, but that staking-as-a-service needs authorisation for custody under Article 75 of Regulation (EU) 2023/1114, with liability for loss under Article 75(8). Paragraph 3.7.1(c) of MAS Guidelines PS-G03, in force on October 4, 2024, tells a provider not to stake, or arrange to stake, a retail customer’s assets. A receipt that US staff may call a digital commodity can still be custody in the Union and a retail restriction in Singapore.

The tests do not nest. Q&A 2067 puts fee-based staking under Article 75 and Article 75(8). Q&A 2607 says Article 70(1) bars own-account use of client assets even with consent. PERG 18.10 puts pooled staking in Article 9Z6, with Article 9Z9 for a validator that does not hold itself out to the public, and says a liquid staking token is “more likely to constitute dealing.” The FCA opened its gateway on September 30, 2026, with applications to February 28, 2027 and a start date of October 25, 2027. See the FCA cryptoasset gateway and why staking rules already split the US, the EU and the UK.

Paragraph 3.7.3 counts locking customer assets for validation rewards as staking. Paragraph 3.7.4 excludes a transfer the customer directs. Accredited-investor tests in paragraph 2.2.2 include more than S$2 million (Singapore dollars) in net personal assets. Hong Kong’s circular of April 7, 2025 (ref. 25EC22) requires written approval and control of withdrawal mediums, and forbids third-party custody. See how an earlier SEC liquid-staking reading sat against MiCA and MAS and the tokenised-securities comparison.

“After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws. This is what regulatory agencies are supposed to do: draw clear lines in clear terms.”

— Paul S. Atkins, chairman, Securities and Exchange Commission (SEC Press Release 2026-30, March 17, 2026)

Why the Kraken judgment still reaches staking intermediaries

The FAQ never names Kraken. Press Release 2023-25, dated February 9, 2023, charged Payward Ventures, Inc. and Payward Trading Ltd. over a staking programme offered since 2019. Investors, the Commission said, “lose control of those tokens,” against advertised annual returns of as much as 21%. The firms agreed to pay $30 million and consented to an injunction against Section 5 of the Securities Act of 1933 and against offering securities through staking services.

Question 1.3 is the opposite structure: no lending, no rehypothecation, and no receipt that fixes the reward. The FAQ has no legal force, so it does not bind Enforcement or vacate the judgment. The injunction, as the press release describes it, reaches offers of securities through staking services, not every non-security receipt.

“Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.”

— Hester M. Peirce, commissioner, Securities and Exchange Commission (SEC statement, February 9, 2023)

What this means for exchanges, custodians and compliance teams

Exchanges are the firms these regimes address. Question 2.6 does not license a staking button. Fee-based staking of client assets is Article 75 custody, and Article 70(1) forbids using those assets for the platform’s own account. Pooled staking is inside UK Article 9Z6. The same retail button in Singapore cuts against paragraph 3.7.1(c). Hong Kong requires written approval under circular 25EC22.

Fund managers sit on the receipt test. Footnote 1 denies the staking receipt any power to fix the reward, so a contractual yield is not Question 1.3’s instrument. BNY Mellon’s addition of staking inside custody, with Galaxy running validators, is the pattern counsel map to that sentence. An exchange-traded product that stakes is not, by that fact, a protocol receipt, which is why the SEC’s exchange-traded-fund fast track stopped at staking.

The working files are the issuer’s definition of functionality, a ban on lending and rehypothecation, a reward method the receipt does not set, and a memo on any central party after September 28. A buyback slide that says “yield” before functionality is shown is the second sentence of Question 2.5. None of this binds Enforcement, the CFTC, or a national authority under Article 75.

What is still open after the September 28 edit

The only edit the page flags is “and has no central party.” Question 2.4 explains it by control: no person decides whether the system fails or succeeds. Sponsoring maintenance on a system that is already functional is, under Question 2.3, not itself an essential managerial effort, and it does not prove that no central party remains. Release No. 33-11434 is still a proposal. This piece does not revisit its discussion of token raises.

ESMA’s published response to the Commission’s MiCA review asks for proportionate staking rules, including disclosure of costs, risks, rewards, collateral and potential losses. It does not amend Article 75. United Kingdom applications run to February 28, 2027, and a US staff FAQ is not an extension of that date.

What is contested is control, whether the receipt comes from the protocol, and whether a central party remains. Chairman Atkins called the March text a bridge to market-structure legislation he would implement with CFTC Chairman Michael S. Selig. Press Release 2026-30 enacts no statute. Until one does, Section 5, Howey, the March 23, 2026 release, and any injunction already entered remain the binding US texts.

TL;DR

Staff of the SEC Division of Corporation Finance, in FAQs issued on September 25, 2026 and updated on September 28, 2026, treat a staking receipt for a digital commodity that is not subject to an investment contract as a digital tool. The same instrument may be a digital commodity if a protocol-based liquid-staking provider issues it. On a functional system with no central party, a buyback announcement is not an essential managerial effort; framing a buyback as yield where the system is not functional can be. The text is not a Commission rule and has no legal force. It does not disturb the February 9, 2023 Kraken settlement. Payward entities paid $30 million and stopped the staking programme, SEC Press Release 2023-25 says. MiCA still routes staking-as-a-service through Article 75, and Singapore still bars retail staking facilitation.

Frequently asked questions

Is a staking receipt a security under the staff FAQ?

A staking receipt is not automatically a security, and it is not automatically outside the securities laws. Question 1.2 says a token that evidences ownership of a digital commodity not subject to an investment contract is a digital tool, or a digital commodity if a protocol liquid-staking provider issues it. Either label fails if an investment contract remains or if Question 1.3 is not met. The FAQs have no legal force.

What must be true before staff will call the instrument a receipt?

Question 1.3 describes a receipt as a certificate that a stated amount of an asset has been deposited and that the depositor owns it. The receipt must not change the asset’s rights or add financial incentives. The issuer cannot transfer, lend, pledge, rehypothecate or otherwise use it, or subject it to third-party claims. Footnote 1 says the staking receipt does not create or fix the reward.

Do these FAQs bind the Commission or the courts?

No. The answers are views of the staff of the Division of Corporation Finance. They are not a rule, regulation or statement of the Commission, which has neither approved nor disapproved them. They have no legal force and create no new obligation. Undefined terms take their meanings from the interpretive release of March 17, 2026. The FAQ is not a safe harbour against Howey, Section 5 of the Securities Act of 1933, or an existing judgment. Staff revised an answer on September 28, 2026.

When does a token buyback become an essential managerial effort?

Question 2.5 was updated on September 28, 2026. Where a crypto system is functional and has no central party, a buyback is not a promise of essential managerial efforts. Where the system is not functional, it can be, if the issuer presents the buyback as yield or return. The edit added “and has no central party.” A functional system that still has a central party is outside the first sentence.

How does MiCA treat staking-as-a-service?

The European Commission, in ESMA Q&A 2067 on June 20, 2024, said MiCA does not prohibit staking and creates no separate staking licence. Staking-as-a-service requires authorisation for custody and administration under Article 75. The provider is liable for loss under Article 75(8), including loss from the staking itself. Q&A 2607, answered on July 9, 2025, says Article 70(1) bars use of client assets for the provider’s own account, even with consent.

Does the Kraken case still matter if the receipt test is met?

Yes. Press Release 2023-25, dated February 9, 2023, records that Payward Ventures, Inc. and Payward Trading Ltd. agreed to pay $30 million and to stop offering securities through crypto-asset staking services. Investors lost control of transferred assets, against advertised annual returns of as much as 21%. The FAQ does not vacate that settlement. Question 1.3 requires the opposite structure: the issuer must not take control.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.