The Securities and Exchange Commission has now made clear to crypto networks what they are allowed to do. After a network has started operating, declaring an intention to repurchase tokens no longer counts as a promise of “essential managerial efforts” under the Howey test. That determination means protocols can move forward with such plans without setting off securities laws.
The division’s update to its crypto FAQ Friday added a section on token buybacks, drawing a clear line between functional networks and those still being built. The guidance applies the Howey test, which asks whether you’re buying something expecting a company to work and make you rich. The SEC said announcing a buyback isn’t that kind of promise.
Gabriel Shapiro, who served as general counsel at Delphi Labs before joining MetaLeX Labs as a securities attorney, said the buyback provision “goes further than I expected” and that securities laws are beginning to resemble opt-in arrangements as the SEC applies them to crypto.
What the SEC Actually Said
The update makes clear that announcing a token buyback after a network becomes operational does not constitute a commitment to managerial efforts that are deemed essential. That is precisely the point being made.
The instructions make a clear distinction: even when a network hasn’t reached full operation and the issuer sells back tokens to holders as a way of generating income for them, that arrangement could still be covered by securities law. Put another way, announcing a buyback is acceptable for a working network, but promoting a buyback as a source of returns for investors before the network is complete risks falling under Howey test standards.
It stands out that Shapiro frames securities law as increasingly looking opt-in. The SEC no longer treats crypto as if it were a traditional stock market. Instead, it treats it as something people can use freely, provided they are honest about their actions.
The Buyback Landscape Today
Among the tokens tracked by DefiLlama for their buyback programs are HYPE, PUMP, ENA, AAVE, SKY, LDO, PENDLE, AERO, RAY, JTO, NEAR, ETHFI, SYRUP, LIT, ASTER, KMNO, MET, CC, CARDS, PONS, and STONK, along with several other tokens.
Hyperliquid is routing USDC reserve yield into HYPE buybacks through AQAv2. Pump.fun has burned some $451 million, which works out to about 16.6% of the total supply. Pons sends roughly 80% of its V1 revenue toward buybacks. Ethena’s holders voted to send 95% of net revenue to ENA.
These figures prove that buybacks are already paying off for protocols. They are taking in revenue, retiring tokens, and letting token owners benefit from the gains. The SEC’s revision now confirms they can operate this way without running afoul of securities rules.
The Market Reaction
The close for BTC was $83k, a drop of 2%. ETH ended at $2,670, down by 2%. SOL closed at $119, down 5%. HYPE closed at $90, down 4%. ZEC closed at $1,570, down 6%. QNT rose 45%. HBAR rose 24%. PUMP rose 12%. Algo rose 12%. Oil rose 4% to $96. Gold fell 3% to $4,185. The Dow futures and Nasdaq futures both headed south, with the Dow down 0.5% and Nasdaq down 0.8%.
Bitcoin ETFs saw $135M in net inflows on Friday and closed a $2.39B week. ETH ETFs saw $87M in inflows and closed a $690M week. Prosecutors seized about $84 million from a payments firm that moved money for Tether and Bitfinex. Bitget reopened Bitcoin withdrawals Monday, with Ethereum coming Tuesday, USDT Wednesday, and everything else October 2; the exchange says it fixed the flaw and users keep their full balances.
Wazz says at least $18.43 million moved across 53 Robinhood Chain token launches from July 10 through September 21. Onchain protocols saw revenue surge over the past 7 days, with Pump leading at $15.16M, followed by Hyperliquid ($15.06M), Stonkfun ($7.48M) and Collector Crypt ($3.24M).
A mixed trading session was recorded, with Bitcoin and Ethereum both falling, while smaller-cap tokens including QNT and HBAR moved up sharply instead. The Robinhood breach stands apart from this pattern, though it underscores the danger that comes with holding assets for others.
What This Means for Investors
The SEC has made clear that networks can route revenue toward buybacks while they remain live, and that removes some uncertainty for investors who hold tokens voting on such proposals. For governance purposes, buybacks are now a clearer option, meaning token holders can evaluate routing votes with more confidence about their legality.
You need to watch how buybacks get described. One announcement treats it as a governance choice. Another sells it as income. The SEC’s guidance is clear on this, and the difference affects what rights you hold as an investor.
The Guidance as Filter
The SEC’s update is a filter, not a blanket pass. Ship a working product and buy back your token, you’re fine. Promise returns before you have a product, you’re exposed.
The difference matters for projects still under construction. They must be cautious about how they present buyback announcements. Once a network is up and running, it can announce a buyback as a governance choice. But a network still being built that presents the same announcement as income for investors oversteps the mark.
This year’s industry push toward a shared approach to token design has found official backing. The guidance quietly supports treating tokens as claims on protocol cash flow instead of wagers on future development work. This is the revenue-focused model, and it now carries regulatory approval. With that stamp of approval in place, the time has come to reassess the value of the best project tokens.
Final Thoughts
The SEC has made its position clear. A dividing line has been established. Protocols now have a standard to measure themselves against, and they can proceed with assurance, provided they remain on the proper side of it.
“goes further than I expected”
That line from Shapiro captures the surprise factor here. The SEC’s opt-in approach to crypto is evolving, and the buyback guidance shows how far that evolution has come.
Where the paper stands
The paper backs the crypto protocols moving forward with token buyback plans and is against the SEC expanding its rulebook to treat announcements of those plans as securities. The SEC’s guidance confirms that announcing a buyback after a network becomes operational does not trigger securities law. That is a win for small networks, which can now plan buybacks without fear of costly legal exposure.
The paper opposes broad new rulebooks that raise the cost of entry for small businesses, and it wants oversight narrow and aimed at actual harm. The SEC’s guidance fits that position by distinguishing between a working network and one still being built, rather than applying the same rules to both indiscriminately.
Investors should watch how buybacks are described. An announcement framed as governance is one thing; one framed as income is another. The SEC’s guidance is clear on this, and the difference affects what rights you hold as an investor.
Source material: “Morning Minute: SEC Clears Token Buybacks for Crypto Networks,” Decrypt.
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