SEC clarifies treatment of crypto token buybacks

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The SEC has issued new staff guidance clarifying how securities laws apply to token buybacks and network development.

The agency said buybacks of tokens linked to functional networks would not, by themselves, amount to a promise of managerial efforts under the Howey test. The treatment could differ for non-functional networks if buybacks are presented as a source of returns.

The FAQ also says routine work to maintain or improve a functional crypto network would not generally count as essential managerial efforts. The guidance does not create new rules or have legal force.