SEC Clarifies Token Buyback Rules Without Central Entities

The U.S. Securities and Exchange Commission (SEC) has updated its crypto asset FAQ to clarify the treatment of token buyback arrangements under securities law.

The update indicates that token buybacks generally do not constitute investment contracts when no central entity stands behind them, but this depends on the structure of the repurchase program rather than the existence of a buyback itself.

The clarification focuses on the lack of a central entity involved in the arrangement, which is key to determining whether it falls outside the definition of an investment contract under the FAQ's updated explanation.

This guidance provides additional detail for crypto projects and U.S. market participants on how token repurchases may be viewed under securities law.