In brief
- SEC staff changed their new crypto FAQ on 28 September so that a token buyback escapes securities treatment only if the network is functional and has “no central party”.
- The first version, published on 25 September, asked only that the network be functional.
- The FAQ is staff guidance with no legal force, and the buyback answer does not say what counts as a central party.
Staff at the US Securities and Exchange Commission have narrowed their guidance on crypto token buybacks three days after publishing it. On 28 September the Division of Corporation Finance added four words, “and has no central party”, to its answer on buybacks in the crypto FAQ it first released on 25 September.
The answer now reads that where a crypto system “is functional and has no central party”, an issuer’s announcement of a buyback of a non-security token “would not constitute a representation or promise to undertake essential managerial efforts”. That matters because such a promise is one route by which a token sale becomes an investment contract, and so a security, under the Howey test. The SEC posted a comparison with the prior version next to the change.
What does “no central party” mean here?
The buyback answer itself does not define it. The question just before it gives the reasoning: once a functional system has no central party, issuer statements likely would not create a new investment contract, because no one “has control of the functional crypto system” in a way that could decide whether it succeeds or fails.
The rest of the answer is unchanged. On a network that is not yet functional, staff say a buyback announcement could count as a promise of managerial effort “if the issuer presents the buyback as creating yield or return for token holders”. The FAQ lists treasury management, supply reduction, protocol-funded burns and rebalancing as common reasons for buybacks.
The edit follows a warning from Miles Jennings, general counsel and head of policy at a16z crypto, who said the first wording could let an issuer announce a buyback without creating an investment contract. He welcomed the change. “The narrowing of Friday’s guidance will bolster its durability, while guarding against attempts to misconstrue it by those that wish to circumvent securities laws,” he wrote on X, Unchained reported.
Guidance, not law
The FAQ builds on the interpretive release the Commission issued on 17 March. Staff stress that the answers “have no legal force or effect” and are not a Commission rule, so a later SEC can drop them. The CFTC published similar staff answers for token issuers the week before, after the Senate failed to advance the CLARITY market structure bill, Cointelegraph reported. Commissioner Hester Peirce plans to leave the agency on 2 October.
For DeFi projects that fund token burns or buybacks from protocol revenue, the question is now whether a foundation, company or multisig that still steers the network counts as a central party. Staff have not said, and the next revision of the FAQ is where that answer would appear.
Sources
- SEC Division of Corporation Finance, crypto asset FAQs, issued 25 September, updated 28 September 2026
- SEC, comparison to prior version of the FAQ, 28 September 2026
- Unchained, 29 September 2026 (Jennings statement)
- Cointelegraph, 28 September 2026 (CFTC guidance, Peirce departure)
