SEC Tightens Token Buyback Guidance Amid Record-Breaking Spending

The US Securities and Exchange Commission (SEC) has updated its guidance on token buybacks in cryptocurrency systems. Just three days after publishing new rules, the SEC changed their stance to include an additional condition for non-security crypto assets.

The original guidance stated that a token issuer could announce a buyback without promising to manage the token's value as long as the system was functional. However, the updated rule now requires the system to have 'no central party' in addition to being functional.

This change affects many crypto projects that use buybacks while still giving people or committees control over how those purchases happen. The SEC staff's updated answer says a buyback announcement for a non-security crypto asset would not, by itself, amount to a promise of essential managerial efforts if the system is both functional and has no central party.

Crypto projects have spent a record $638 million on token buybacks through late August. The change raises practical questions for these projects about who actually controls the buying process.