SEC Token Buybacks Clear for Functional Crypto Networks

The SEC just answered a question that has hovered over the crypto industry for years: can a token buyback trigger securities laws? For projects running live products and paying real revenue back to holders, the answer is now, in most cases, no. The SEC’s updated guidance on token buybacks draws a clear line between protocols that already work and those still promising future returns, and that distinction changes how dozens of tokens can legally operate.

Key takeaways

• The SEC’s Division of Corporation Finance updated its crypto FAQ on Friday, clarifying that a token buyback on a functional network does not amount to a promise of managerial effort under the Howey test.
• Maintaining, upgrading, or promoting a functional network is not treated as offering securities, according to the new guidance.
• Networks that are not yet functional and pitch buybacks as a source of yield or returns can still trigger securities laws.
• DefiLlama tracks buyback programs across tokens including HYPE, PUMP, ENA, AAVE, SKY, LDO, PENDLE, AERO, RAY, JTO, NEAR, ETHFI, SYRUP, LIT, ASTER, KMNO, MET, CC, CARDS, PONS, and STONK, all tied to projects with live products and revenue.
• Securities attorney Gabriel Shapiro said the buyback section “goes further than I expected,” calling securities laws “opt-in” as the SEC now applies them to crypto.