SEC Distinguishes Between Routine Buybacks and Profit Promises in Token Guidance

The US Securities and Exchange Commission (SEC) has released new guidance on token buybacks and profit promises, drawing a clear line between routine treasury management and a promise to deliver returns.

The September 25 FAQ explains how the SEC's Division of Corporation Finance staff applies the March interpretation when an issuer promotes a non-security crypto asset or manages a buyback. A functioning crypto system is treated differently from one still under development, where token holders are promised a return through the issuer's efforts.

A key distinction lies in whether the issuer frames a buyback as treasury management or a source of holder return. If it's the former, it's viewed as routine; if it's the latter, it's seen as creating a new investment contract.