SEC Staff Guidance Says Token Buybacks Alone Do Not Create Securities

The SEC's Division of Corporation Finance published updated Frequently Asked Questions on Friday, September 25, 2026, addressing whether token buybacks, network upgrades, and marketing claims automatically turn a crypto asset into a security, according to The Block. The nonbinding staff guidance adds detail on token marketing and ongoing development, marking a significant step toward regulatory clarity that the crypto industry has long sought.

The FAQs address token buyback programs with a functional-network distinction that carries significant implications for issuers. Announcing a buyback program for an already-functioning crypto network would not, by itself, make the associated token subject to an investment contract, according to the SEC staff guidance. However, that conclusion would not necessarily hold for a network that is not yet functional where issuers pitch the buyback as a source of returns for holders.

The guidance also addressed projects that continue developing after launch, stating that once a crypto system is functional, services to secure, maintain, or improve the network do not automatically create an investment contract. The SEC's framework for staking tokens builds on the Supreme Court's 1946 decision in SEC v. W.J. Howey, which established that an investment contract exists when there is an investment of money in a common enterprise with a reasonable expectation of profits derived from the efforts of others.

For crypto issuers, the FAQs provide a practical framework for evaluating whether specific activities—staking programs, buyback announcements, network upgrades, and marketing campaigns—trigger securities law obligations. The guidance helps project teams and developers judge which buybacks, upgrades, and marketing moves cross Howey test red lines, reducing compliance risk in an area that has historically been uncertain.