SEC Tightens Token Buyback Guidance Amid $638M Spending Record

The US Securities and Exchange Commission (SEC) has updated its guidance on token buybacks in cryptocurrency projects. This change comes just three days after the initial publication of the guidance on September 25. The SEC staff added a new condition to their previous answer, stating that a token issuer can announce a buyback without it being treated as a promise to manage the token's value if the crypto system is both functional and has 'no central party.'

This change affects many cryptocurrency projects that use buybacks while still giving people or committees control over how those purchases happen. TokenLogic reported in February 2023 that Aave's Finance Committee could adjust weekly AAVE buyback volumes within a 75% range, showing discretion in action.

The new guidance raises practical questions for projects using buybacks: who actually controls the buying? Even if a project has already spent millions buying its token, it may not be clear whether people still have meaningful power over the system and its economic decisions.