Which Crypto Token Buybacks Pass the SEC's 'Central Party' Test

New SEC staff guidance says a token buyback on its own doesn’t make a crypto asset a security, as long as no central party controls the network. But buyers should read the fine print.

SEC staff narrowed their token buyback guidance on Sept. 28.

Posted September 30, 2026 at 8:12 am ET.

Crypto projects that buy back their own tokens have operated under a dour legal cloud within the US for nearly a decade. A buyback paid for with a project’s revenue can look like a promise of profits from someone else’s work, and that promise is part of what makes a token a security according to the Howey test, the Supreme Court’s 1946 standard for an investment contract.

On Sept. 25, however, the Securities and Exchange Commission appeared to lift the cloud at last in an FAQ about how securities law applies to “certain types of crypto assets and certain transactions involving crypto assets.” New guidance from the agency’s corporate finance division said that once a crypto network works as designed, announcing a token buyback would not, by itself, constitute a promise of essential managerial efforts. PUMP, the token of the memecoin launchpad Pump.fun, rose about 10% the next day, given its buy-and-burn program.