SEC staff narrows token buyback guidance to networks with no central party

What happened

SEC staff narrowed their crypto token buyback guidance three days after first publishing it, so it now covers only networks that are functional and have "no central party."

The Division of Corporation Finance updated its crypto FAQ on Sept. 28, inserting "and has no central party" into the buyback answer. As updated, staff wrote that when a system meets both conditions, announcing a buyback of a non-security crypto asset would not amount to a promise to carry out essential managerial efforts.

The rest of the answer stayed the same. On a network that is not yet functional, staff still say a buyback announcement could be treated as that kind of promise if the issuer frames the buyback as a source of yield or return for token holders. The division first published the FAQs on Friday, Sept. 25, with an answer that required only that the crypto system be functional. The SEC posted a comparison with the earlier version alongside the change.

Why it matters

Many crypto projects run buybacks while people, companies, or committees keep some control over how the purchases happen, which makes the added condition consequential.

The buyback answer does not define a central party, but a nearby answer in the same FAQ explains the concept: once a functional system has no central party, issuer statements likely would not create a new investment contract, since no one controls the system in a way that could affect its failure or success.

The practical question for projects running buybacks is who actually controls the buying. A project may have spent millions buying its token, but that number says little about who decides whether the next purchase happens, how large it is, or whether the program ends.

What the data shows

Crypto projects spent a record $638 million on token buybacks through late August, according to previous CryptoSlate reporting. Ethena proposed a buyback program in late August. Pump.fun's PUMP token page says 50% of defined platform revenue was locked by code and set to be burned for one year starting April 28.

Background

The FAQs build on the interpretive release the SEC issued on March 17. The SEC's March crypto-asset interpretation defines a central party as a person, company, or group holding operational, economic or voting control over a crypto system. The definition covers the crypto system as a whole, so holding control over a project's treasury or buyback program does not automatically make the entire system one with a central party.

In an April 28 disclosure, Pump.fun said references to PUMP purchases and a "buyback program" generally described plans or smart-contract functions, not a firm promise to buy tokens. It made an exception for purchases that on-chain code had already set to run automatically before April 28, 2026 UTC.

Miles Jennings, general counsel and head of policy at a16z crypto, had raised concerns about the original wording. On Monday, Jennings praised the revision.

What is still unclear

• The buyback answer does not define a central party, and the guidance reflects staff views rather than a Commission rule.
• The change raises a practical question for projects using buybacks: who actually controls the buying?

Questions readers ask