Short answer: On Friday, September 25, 2026, the SEC's Division of Corporation Finance updated its crypto asset FAQ. Staff said that announcing a token buyback for an already functioning network does not, by itself, turn the token into an investment contract, and that ongoing work to maintain or upgrade a live network is not the kind of "managerial effort" that makes a token a security. The guidance is non-binding staff opinion; a day earlier, the CFTC updated its own crypto FAQ.
What happened
The SEC staff published new answers in its frequently asked questions on crypto assets, building on the agency's March 2026 interpretive release on how securities laws apply to tokens. The key test is the Howey test, a 1946 Supreme Court standard: an asset is an investment contract, and therefore a security, if people invest money in a common enterprise expecting profits from the efforts of others. The new answers address three common situations:
- Token buybacks: if the network already works, announcing a buyback program does not on its own create an investment contract. If the network is not yet functional and the buyback is pitched as a source of yield or returns for holders, the analysis may change.
- Network upgrades: once a system is functional, services to secure, maintain, improve or enhance it, or to grow its network effects, do not count as the managerial efforts that Howey looks for.
- Marketing: promoting a network's existing uses generally does not create an expectation of profit. Statements about planned features are also acceptable as long as they do not tout the potential for profit.
The staff stressed that each answer depends heavily on the facts of the specific case.
Why the SEC is using FAQs instead of a law
The update arrives after the Clarity Act, the market-structure bill meant to define when tokens are securities, failed a Senate cloture vote in mid-September. SEC Chair Paul Atkins had signaled in July that the agency would act on its own if the bill stalled. Since then it has proposed Regulation Crypto Assets and issued a five-year Innovation Exemption for tokenized stocks. Staff FAQs are the lightest tool of all: they carry no legal force and a future commission could reverse them.
| Topic | Staff view | Caveat |
|---|---|---|
| Buybacks on a live network | Not an investment contract by themselves | Different if the network is not yet functional and buybacks are sold as returns |
| Upgrades and maintenance | Not "managerial efforts" under Howey | Applies once the system is functional |
| Marketing current uses | Generally no expectation of profit | Touting profit potential changes the picture |
| Legal weight | Staff guidance only | Courts and a future SEC are not bound |
What the CFTC changed the day before
On Thursday, September 24, the Commodity Futures Trading Commission (CFTC) also updated its crypto FAQ. Futures firms and clearinghouses may invest customer funds in tokenized versions of assets they were already allowed to hold, provided investment and custody rules are met. Regulated firms may also keep records on a blockchain, but must still be able to produce them if the chain or its block explorer stops working.
Reaction from lawyers was mixed. Corporate securities attorney Gabriel Shapiro of MetaLeX Labs said the buyback answer went further than he expected and that securities law is starting to look "opt-in" for crypto, while warning that a private plaintiff or a future SEC could see it differently.
What it means for you
The FAQ is aimed at token teams, but it shapes what holders will see:
- Read buyback announcements closely. Projects with live networks now have staff comfort to announce buybacks; read whether a team presents them as a "return" for holders.
- Profit promises remain a red flag. The SEC line still treats touting profits as a warning sign, and so should you. A token marketed mainly on promised returns deserves extra scrutiny.
- Guidance is not law. Staff positions can change with a new commission or a court ruling, so a token's regulatory status is not settled for good.
- Listings may follow. Clearer lines on when a token is not a security can make U.S. platforms more willing to support it, which affects where and how easily you can swap it.
Key takeaways
- The SEC's Division of Corporation Finance updated its crypto FAQ on September 25, 2026.
- Buybacks on a functioning network do not alone make a token an investment contract.
- Maintaining and upgrading a live network is not a managerial effort under the Howey test.
- The CFTC separately allowed tokenized versions of permitted assets for customer-fund investments.
Because promised returns are the core of most crypto frauds, it is worth reviewing how to avoid crypto scams. For the bigger rulebook this FAQ builds on, see our post on Regulation Crypto Assets.
Frequently asked questions
Do token buybacks make a crypto a security?
According to SEC staff FAQs updated on September 25, 2026, announcing a buyback for an already functioning crypto network does not, by itself, make the token an investment contract. The answer may differ for a network that is not yet functional if the buyback is promoted as a return for holders.
What is the Howey test in crypto?
The Howey test is a 1946 U.S. Supreme Court standard used to decide whether something is an investment contract: money invested in a common enterprise with an expectation of profit from the efforts of others. The SEC applies it to tokens to judge whether they are securities.
Are SEC crypto FAQs legally binding?
No. The FAQs are staff guidance from the Division of Corporation Finance. They show how staff currently view these issues, but they have no legal force and could be changed by a future commission or challenged in court.
