SEC Staff Draws A Line On Token Buybacks and Liquid Staking in New FAQs

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The SEC’s Division of Corporation Finance announced buybacks of non-security tokens on a functional crypto system does not by itself promise essential managerial efforts, the element that turns a token into an investment contract under Howey. A network still short of functional gets a different answer if the issuer pitches the buyback as yield for holders. The same FAQs treat qualifying liquid staking receipts as non-securities, provided the issuer cannot lend, pledge or otherwise use the deposited asset.

None of it binds the Commission. The staff says the published FAQ carries "no legal force or effect," and the Commission has neither approved nor disapproved them.

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REGULATION

SEC Staff Clarifies Token Buybacks and Liquid Staking in New FAQs