SEC Clarifies Crypto Buyback Guidelines

The SEC has clarified its stance on certain crypto buybacks and staking receipt tokens in a new guidance. According to the staff, some non-security crypto assets and certain staking receipt tokens may avoid securities treatment under specified conditions. This gives U.S. firms a clearer framework for token programs.

Buybacks of non-security crypto assets that do not promise essential managerial efforts are generally seen as okay. However, if a network is not functional and the buyback is presented as creating yield or returns for holders, this analysis may differ.

The guidance also states that staking receipt tokens tied to digital commodities not subject to an investment contract may be treated as digital tools. Protocol-based liquid-staking receipt tokens, on the other hand, may qualify as digital commodities if their value comes from a functional system's programmatic operation and supply and demand.