SEC Clarifies Token Buybacks and Liquid Staking in New FAQs

The US Securities and Exchange Commission (SEC) has released new FAQs on token buybacks and liquid staking, clarifying how they fit within federal securities laws. The guidance explains that announcing a buyback of a non-security token on a functional crypto system does not amount to a promise of essential managerial efforts.

This distinction matters for issuers navigating the Howey test and determining whether their tokens qualify as investment contracts under current SEC interpretations. According to the new guidance, these announcements do not constitute a promise to undertake essential managerial efforts when the underlying crypto system is already functional.

The analysis changes for systems that are not yet functional. A buyback announcement could be treated as such a promise if the issuer frames it as “creating yield or return for token holders,” according to the FAQs.