As the U.S. grapples with refining its regulatory framework for digital assets, South Korea continues to lag behind in establishing a basic law for the sector. U.S. regulatory agencies are forging ahead with concrete measures, even in the absence of congressional action.
SEC: Blockchain Upgrades and Token Buybacks Don’t Constitute Investment Contracts
On September 25, The Block and other media outlets reported that the U.S. Securities and Exchange Commission (SEC) had issued more precise guidelines for distinguishing between virtual assets and securities.
In a Q&A document, the SEC’s Division of Corporate Finance clarified that for virtual asset projects with existing functionality, ongoing improvements or self-token buybacks would not classify token sales as investment contracts.
This interpretation exempts functional virtual asset projects from registration requirements under U.S. federal securities laws.
The SEC elaborated that developers’ commitments to ongoing security maintenance, functionality enhancements, or user base expansion do not meet the ‘essential managerial efforts of others’ criterion under the Howey Test.
The Howey Test, a cornerstone of U.S. securities law, determines whether a transaction qualifies as an investment contract. A key factor is whether investors anticipate profits primarily from others’ efforts.
The virtual asset industry has long worried that post-launch updates and ecosystem support by developers or foundations might be construed as creating profit expectations for token holders.
This new interpretation significantly reduces the likelihood of tokens being classified as securities merely because blockchain developers continue to enhance security or functionality after launch.
The SEC applied the same logic to token buybacks, stating that repurchases aimed at reducing supply or boosting token prices are unlikely to meet the ‘managerial efforts’ criterion of the Howey Test.
This development is expected to ease regulatory pressures on virtual asset projects that buy back and burn tokens using transaction fees or business revenues. Even if such actions reduce market circulation or increase token prices, the risk of securities classification has diminished.
Legislative Progress Stalls While Regulatory Adjustments Accelerate
In the wake of the Clarity Act’s effective collapse, the SEC has redoubled its efforts to establish legal clarity independently. This contrasts sharply with South Korea, where both legislative progress and regulatory adjustments have stalled.
The Clarity Act failed to secure the necessary 60 votes to end debate in a Senate procedural vote on September 15. While a re-vote remains possible, the impending midterm elections make passage during this session unlikely.
In response, the SEC and Commodity Futures Trading Commission (CFTC) are leveraging their existing authority to address the legislative gap. Caroline Pham, former acting CFTC chair and current Chief Executive Officer (CEO) of Institutional at Moonpay, noted at the Eastpoint 2026 event that U.S. regulators are swiftly adapting existing frameworks to oversee virtual assets.
Pham explained that Project Crypto, spearheaded by SEC Chair Paul Atkins, aims to apply existing securities and derivatives regulations to virtual assets, rather than creating an entirely new framework. The goal is to recognize blockchain infrastructure for transaction records and executions within the current regulatory landscape.
Meanwhile, South Korea faces delays in submitting its government-proposed basic law for digital assets, with the planned September public hearing now effectively canceled.
While financial authorities aim to present the bill to the National Assembly’s Political Affairs Committee in November, overlapping schedules with national audits and budget reviews cast doubt on whether the basic law will be enacted by year-end.
