The SEC's Division of Corporation Finance quietly answered a question that has kept crypto lawyers up at night for two years. In an updated FAQ published Friday, September 25, the division said token buybacks and routine network upgrades don't automatically turn a crypto asset into a security.
The guidance leans on the Howey test's "managerial efforts" prong — the part of the 1946 framework that asks whether an investor's profit depends on someone else's ongoing work. Once a network is up and running, the SEC said, work to secure, maintain, or improve it doesn't count as the kind of managerial effort that creates a security. Marketing a network's existing features works the same way: describing what already exists doesn't automatically create an expectation of profit.
Timing matters here. The FAQ landed just over a week after the Senate failed to advance the Clarity Act, the bill meant to draw a clean line between SEC and CFTC jurisdiction over digital assets. With Congress stalled, the SEC extended its March interpretive release through staff guidance instead of waiting for new legislation.
There's a catch, and it's a real one. For networks that aren't functional yet, pitching a buyback as a return for token holders still looks like a securities offering under the FAQ's own logic. The SEC is explicit that every case turns on its specific facts, not a blanket exemption.
For teams running live chains, this removes a genuine source of legal risk — lawyers have routinely told DeFi protocols and L1 foundations to avoid buyback programs precisely because of Howey uncertainty. Now they have something in writing to point to. The real test comes the first time a project leans on this FAQ language in an actual enforcement fight.
