SEC Staff Explains Token Buybacks in Functional Networks

Token buybacks are addressed in a new FAQ issued on September 25, 2026. The Division of Corporation Finance at the U.S. Securities and Exchange Commission (SEC) explains how, for crypto assets, announcing a buyback program may be assessed under federal securities laws.

The FAQ states that merely announcing a buyback of a crypto asset that is not a security in a functional crypto system, by itself, does not constitute a promise of “substantial managerial efforts” under the Howey test. In the United States, this test is used to assess whether a particular arrangement may be an investment contract and therefore a security.

Token Buybacks and Network Functionality

The statement distinguishes between functional and nonfunctional crypto systems. For a functional network, the FAQ says that merely announcing a buyback does not automatically mean token holders expect profits primarily from the managerial efforts of others.

The situation may be different for a nonfunctional crypto system. An announced buyback may be a relevant promise if the issuer presents it as a source of profit or returns for holders. The specific context of the project’s communications and operations remains decisive.

The guidance concerns a narrow element of the investment contract analysis. It does not mean that the SEC has generally approved token buybacks, nor does it determine that a specific token or buyback program is not a security. The FAQ also does not assess whether such programs comply with other regulations.

Not an SEC Rule or Safe Harbor

The document was issued by staff of the Division of Corporation Finance. It is not a rule, a formal position of the full SEC Commission, or a legally binding decision. The staff’s position does not have the force of law.

For operators of already functional crypto networks, however, the document reduces one regulatory uncertainty when considering buybacks, token burns, or treasury management. Token buybacks are used as a mechanism for managing supply and treasury allocation. According to the staff, merely announcing them in a functional network does not automatically satisfy the referenced element of the Howey test.

What to Watch

• whether the SEC adopts binding rules or whether the Commission formally confirms or changes the staff’s position,
• how the SEC will assess buybacks for networks with disputed functionality or decentralization,
• how projects and their legal advisers distinguish treasury management from communications presenting a buyback as a return for holders.

The FAQ therefore does not provide a universal answer for token buyback programs. It does, however, explain that in a functional crypto system, merely announcing a buyback is not enough to conclude that there is a promise of substantial managerial efforts under the Howey test.

Verified and updated: 09/28/2026 15:20