--- title: >- SEC Staff Says Token Buybacks on Functional Networks Don't Make Crypto a Security url: >- https://www.cryptocatalyst.news/articles/2026-09-28-sec-clarifies-token-buybacks-wont-automatically-make-crypto-a-security canonical: >- https://www.cryptocatalyst.news/articles/2026-09-28-sec-clarifies-token-buybacks-wont-automatically-make-crypto-a-security date: '2026-09-28T13:06:24.473276+00:00' category: policy tags: - sec - token-buybacks - crypto-regulation - securities - crypto-news source: Decrypt source_url: 'https://decrypt.co/379398/sec-staff-token-buybacks-dont-make-crypto-security' sources: - name: Decrypt url: >- https://decrypt.co/379398/sec-staff-token-buybacks-dont-make-crypto-security - name: Decrypt url: >- https://decrypt.co/379412/morning-minute-sec-clears-token-buybacks-for-crypto-networks - name: The Block url: >- https://www.theblock.co/news/regulation/2026-09-25-sec-crypto-faq-addresses-token-buybacks-network-upgrades-promises-profit-416914 publisher: CryptoCatalyst summary: >- SEC staff guidance says token buybacks on functional networks don't automatically make crypto a security. The FAQ also addresses network upgrades and promises of profit. image: >- https://www.cryptocatalyst.news/images/articles/2026-09-28-sec-clarifies-token-buybacks-wont-automatically-make-crypto-a-security.webp generated_by: automated editorial pipeline --- # SEC Staff Says Token Buybacks on Functional Networks Don't Make Crypto a Security New SEC staff guidance says announcing a token buyback on a functional network isn't a promise that turns the token into a security, a shift one attorney says makes securities laws look "opt-in." ## Key takeaways - SEC staff guidance says token buybacks on functional networks don't automatically create an expectation of profit. - The FAQ also addresses network upgrades, saying promoting future improvements doesn't by itself create profit expectations. - One attorney says the shift makes securities laws look "opt-in" for crypto projects. - The guidance was published September 25, 2026, marking a shift from the Gensler-era approach. - Projects that market tokens primarily as investment opportunities could still face SEC scrutiny. The U.S. Securities and Exchange Commission (SEC) has issued new staff guidance stating that token buybacks on a functional network do not automatically make a cryptocurrency a security. The guidance, published as an FAQ on September 25, 2026, marks a significant shift from the previous regulatory stance under former Chair Gary Gensler and suggests a more flexible approach to crypto regulation. ## What Changed in the SEC’s Stance? The SEC’s new FAQ indicates that announcing a token buyback on a network that is already operational does not constitute a promise of profit, a key factor in the Howey Test used to determine whether an asset is a security. According to the guidance, promoting a network’s current uses generally would not create an expectation of profit. The FAQ also addresses network upgrades, stating that promoting future improvements to a network's functionality would not by itself create an expectation of profit. One attorney characterized the shift as making securities laws look "opt-in," meaning projects can avoid triggering security classification by focusing on current network utility rather than promises of future returns. ## Why This Matters for Crypto Projects This clarification is a significant development for crypto projects that have been cautious about engaging in token buybacks due to regulatory uncertainty. The guidance suggests the SEC is adopting a more nuanced approach, focusing on the functionality of the network rather than the actions of the project itself. This shift could encourage more crypto projects to engage in token buybacks as a means of supporting their ecosystems without fear of retroactive security classification. ## What It Means for Investors For investors, this guidance provides more clarity on what actions by crypto projects are likely to be scrutinized by the SEC. It suggests that as long as a network is functional and buybacks are not tied to promises of profit, investors can participate in token buybacks without concerns about the asset being classified as a security. However, the guidance does not address all scenarios — projects that market tokens primarily as investment opportunities or promise returns from buyback programs could still face scrutiny. ## What to Watch Next Crypto projects should pay close attention to any further clarifications or guidance from the SEC regarding token buybacks and other activities. The SEC's Regulation Crypto proposal, which could exempt some crypto projects from securities registration, is also moving forward. Investors should monitor how the SEC enforces these guidelines in practice, as this could provide further insights into the regulatory landscape for crypto assets. For more on token buybacks in crypto, see how Ethena has used this strategy to navigate bear markets and expand its yield mechanisms here. ## FAQ ### Does the SEC now say all token buybacks are legal? No. The SEC says token buybacks on a functional network don't automatically make a token a security. But projects that market buybacks as a way to generate returns for investors could still face scrutiny under the Howey Test. ### What did the SEC say about network upgrades? The SEC's FAQ says promoting future improvements to a network's functionality would not by itself create an expectation of profit. This gives projects more leeway to discuss development roadmaps without triggering security classification. ### What is the Howey Test? The Howey Test is a legal test from a 1946 Supreme Court case used to determine if an asset is a security. It looks for an investment of money in a common enterprise with a reasonable expectation of profit derived from the efforts of others. ### When was this SEC guidance published? The SEC staff published the FAQ on September 25, 2026. It represents a significant shift from the approach taken under former Chair Gary Gensler. ## Sources This article synthesizes reporting from [Decrypt](https://decrypt.co/379398/sec-staff-token-buybacks-dont-make-crypto-security), [Decrypt](https://decrypt.co/379412/morning-minute-sec-clears-token-buybacks-for-crypto-networks), [The Block](https://www.theblock.co/news/regulation/2026-09-25-sec-crypto-faq-addresses-token-buybacks-network-upgrades-promises-profit-416914), written by an automated editorial pipeline. See https://www.cryptocatalyst.news/editorial-policy. ## How to cite CryptoCatalyst.news, "SEC Staff Says Token Buybacks on Functional Networks Don't Make Crypto a Security", 2026-09-28, https://www.cryptocatalyst.news/articles/2026-09-28-sec-clarifies-token-buybacks-wont-automatically-make-crypto-a-security