- SEC staff said on 25 September that announcing a buyback of a non-security token on a working network does not, by itself, amount to promising the “essential managerial efforts” that help make something a security.
- Staff FAQs are not rules. They were not voted on by the Commission, they carry no force of law, and a future SEC can withdraw them.
- None of it changes anything in Britain. The FCA regime due in October 2027 does not use the American test at all.
The SEC spent years arguing in American courts that various crypto tokens were securities. On 25 September its staff published a set of answers pointing the other way on one narrow question: whether a project buying back its own token counts as evidence that the token is a security.
Buybacks have become one of the main ways crypto projects hand revenue back to the people holding their token. If US regulators treat that as a sign the token is a security, the project needs to register with the SEC or risk being sued, which is expensive enough that most simply stop.
Staff have now said it does not count on its own. That lowers the legal risk around a practice that already moves hundreds of millions of dollars a year. It is also guidance rather than law, and it is not the rulebook that applies to anyone buying tokens from the UK.
What the staff actually said
We have not seen the primary document. The SEC publishes these FAQs itself, but no copy was available to us at the time of writing, so this piece is built from two secondary reports and is more cautious than usual as a result.
The Defiant reported that staff said announcing buybacks of non-security tokens on a functional crypto system does not constitute a promise to undertake essential managerial efforts. The Block, covering the same document, reported that it also addresses network upgrades and promises of profit, and quoted staff saying that “promoting a network’s current uses generally would not create an expectation of profit”.
The Defiant’s headline also refers to liquid staking, where you deposit a coin such as ethereum to help secure the network and receive a tradable receipt token in return. We cannot describe what the FAQs say about it beyond the fact that they cover it, so we are not going to try.
The test all of this turns on
American regulators decide whether something counts as an “investment contract”, and therefore a security, using a 1946 Supreme Court case about Florida orange groves. Four things have to be present: money is invested, it goes into a common enterprise, the buyer expects a profit, and that profit is expected to come from the efforts of somebody else.
The last part is where crypto tokens live or die. “Essential managerial efforts” is the phrase lawyers use for it. If buyers are relying on a central team to build, promote and run the thing that gives the token value, it looks like a security. If the network already works and nobody is promising to make it work, the argument gets much weaker.
A buyback is the crypto version of a share buyback: the project takes revenue it has earned and uses it to buy its own token off the open market, reducing the supply in circulation. It looks, on the face of it, exactly like a central team doing work that benefits holders financially. Staff have now said that announcing one is not, by itself, that kind of promise. The qualifier is carrying most of the weight in that sentence.
Guidance is not a rule
This is the part being flattened in most of the coverage. Staff FAQs are written by SEC employees, not adopted by the five commissioners. They go through no rulemaking process, no public consultation and no vote. They carry no force of law, they do not bind a court, and they do not bind state regulators or private claimants, who bring a great many of the securities cases crypto projects actually face.
They can also be withdrawn. A future commission with a different view can delete the page, and nothing about the underlying law will have changed. Headlines describing the SEC as having “cleared” a hurdle are describing a softer thing than the word suggests.
The record is mostly two companies
Crypto projects spent around $638m on token buybacks through late August 2026, according to Allium Labs data reported by CryptoSlate. That is a record, up from about $545m over the same stretch of 2025.
Of that total, roughly $370m came from Hyperliquid and about $200m from Pump.fun. Two projects account for close to 90% of the figure. The number is real, but it describes the behaviour of a couple of unusually profitable businesses rather than a broad industry practice, and a single quiet quarter from either would reverse the trend line.
What it means from here
Nothing in the FAQs applies to a UK holder. Britain does not use the orange-grove test, and the FCA’s incoming cryptoasset regime, due to take effect in October 2027, defines what is regulated by the activity being performed rather than by asking whether buyers are relying on somebody else’s efforts. A token treated as a non-security in New York is not automatically treated the same way here, and our policy coverage will follow the FCA’s final rules as they land.
What to watch
Whether the Commission itself ever adopts any of this through formal rulemaking. That is the difference between a position staff hold today and one that survives a change of chair.
Also whether buyback spending spreads beyond Hyperliquid and Pump.fun over the next couple of quarters. If it does, the legal question becomes a live one for dozens of projects rather than two. If it does not, the record figure was a story about two balance sheets.