The SEC Just Described TEXITcoin — and Called It Legal

The SEC just told the crypto industry, in writing, that building on a working network is not a securities violation. Texas should read it.

On August 18, 2026, the Securities and Exchange Commission issued Regulation Crypto Assets (Release No. 33-11434), and its Division of Corporation Finance followed with a plain-language FAQ for crypto assets. Buried in that FAQ, at Question 2.3, is the most important paragraph the federal government has ever written for projects like TEXITcoin.

Here it is, verbatim:

The SEC's new crypto FAQ says maintaining and growing a functional network is not a securities violation. That's TEXITcoin's biography — so why is Texas still pretending otherwise?

Question 2.3: Software is often in a constant state of development because of ongoing maintenance and upgrades. In addition, a functional crypto system may require network effects to grow. After a crypto system is functional, what activities can the issuer and other market participants engage in with respect to the crypto system that would not constitute essential managerial efforts?

Answer: The Commission has recently expressed the view that, once a crypto system is functional, services to secure, maintain, improve, or enhance such a system or its functionality, or to facilitate network effects, whether through sponsoring or funding development projects or other similar activities, would not involve essential managerial efforts. As a result, any representations or promises by the issuer to provide or continue to provide (or arrange for the provision of) such services after the crypto system is functional would not satisfy the Howey test.

Read that again. Slowly. Because that paragraph describes, almost word for word, what TEXITcoin actually is.

What 2.3 actually says

The Howey test — the 1946 Supreme Court framework that decides whether something is an "investment contract" and therefore a security — turns on whether buyers expect profits from the essential managerial efforts of others. That prong has been the government's favorite weapon against crypto for a decade: if the founders keep building, the argument goes, then buyers must be relying on the founders, so it's a security.

Question 2.3 cuts that off at the knees. The SEC now says that once a crypto system is functional, the people behind it can keep securing it, maintaining it, improving it, funding development, and working to grow network effects — and none of that counts as the "essential managerial efforts" that make something a security.

In plain English: building is not a crime, and growing a network is not a securities offering.

Why this is TEXITcoin's biography

We have said this from day one, and we said it under oath in Austin: TEXITcoin is a community currency. It has no value unless the community makes it valuable. The blockchain was functional — mining, transacting, doing exactly what it was built to do. What we do after that is what 2.3 now describes: maintain the code, improve the system, fund development, and work like hell to grow the network.

That is not a managerial scheme to generate profits for passive investors. That is what every open-source project, every community currency, and every honest network in history has done. The SEC now agrees that this kind of work, standing alone, does not satisfy Howey.

And the FAQ doesn't stop there. Question 2.4 says that once a functional crypto system has no central party, statements by the issuer likely can't create a new investment contract at all — because no one controls the system. Question 2.5 says even buyback announcements for functional, non-security crypto assets aren't "essential managerial efforts." The whole document reads like a roadmap away from the enforcement-first era.

The direction of the wind

This didn't come out of nowhere. Earlier this year the SEC issued guidance on crypto asset disclosures. About a month ago came more. Now Regulation Crypto Assets and this FAQ. The pattern is unmistakable: the federal government is moving, step by step, toward clarity and openness toward crypto. Not because they suddenly love us — but because reality won. Crypto isn't going away, and America finally wants a seat at the table instead of handing the industry to Dubai and Singapore.

That's why we started TEXITcoin in the first place. Honest money, mined in Texas, by Americans, for Americans — a seat at the table for people the legacy system forgot.

Meanwhile, in Texas

Here is the part that should embarrass somebody.

While the SEC is publishing FAQs explaining that maintaining and growing a functional network is not a securities violation, the Texas State Securities Board is spending your tax dollars trying to convince a judge that TEXITcoin — a functional, community-run currency — is an unregistered security, and that I committed fraud for telling people it has a plan to grow.

The TSSB's theory depends on the exact argument the SEC just rejected: that my ongoing work on a functional network is the "essential managerial effort" that makes TXC a security. Under the federal framework now in print, that theory is dead on arrival. Texas isn't just behind the curve. Texas is driving the wrong way on a one-way street, honking.

So I'll ask the question out loud: when does this case simply go away because Texas is so far out of sync with the rest of the country?

What this means for our case

Let me be careful and honest here, because I always am about the legal stuff:

• The SEC FAQ is federal guidance. It is not binding on a Texas state court, and it does not decide the specific hosted-mining question the TSSB hung its case on. I won't pretend otherwise.
• But guidance like this matters. Judges read the room. Regulators read each other. When the federal government's position is "this activity is not a security," a state agency arguing the opposite starts to look less like enforcement and more like a vendetta.
• And it strips away the last cover for the fraud smear. The TSSB threw fraud allegations at us because "scam" is the only frame they know for crypto. But the record in that hearing showed no fraud — no missing money, no fake product, no false promises. Now the federal government has confirmed the underlying activity isn't even the thing they claimed it was. What's left? Nothing. There was never anything.

The government is pissed and confused that TEXITcoin is not a scam, and they don't know what to do about it. The SEC chose to adapt. The TSSB chose to double down. History will grade both papers.

The bottom line

We didn't need the SEC's permission to be right — but it's nice to have it in writing.

TEXITcoin is a community currency on a functional network. We maintain it, we improve it, we grow it, and we tell the truth about the risks while we do it. The federal government now says that's not a security. The TSSB says it's fraud. One of them is reading the law, and the other is reading from a script that expired years ago.

We'll keep building. That's what we do. And when the briefs are filed and the Proposal for Decision lands, we'll be here — same as always — saying what we've said from the start:

We did nothing wrong. And now the SEC's own FAQ explains why.

— Bobby

This post is commentary, not legal advice. The SEC FAQ referenced is available at sec.gov under the Division of Corporation Finance's "FAQs: Crypto Assets." Our full hearing breakdown and the complete legal chronology are on the legal page.