SEC staff clarify token buybacks and liquid staking in new FAQs

The U.S. SEC's Division of Corporation Finance issued new FAQs on September 25, 2026, clarifying that token buybacks and network upgrades on functional crypto networks do not automatically classify tokens as securities under the Howey test. However, the staff warned that buybacks on unfinished networks promoting investor yields could still cross into security territory. Concurrently, prominent pro-crypto SEC Commissioner Hester Peirce announced her resignation effective October 2, 2026, leaving the agency with just two active commissioners.

Guidelines on token buybacks

• ▪The U.S. Securities and Exchange Commission's Division of Corporation Finance issued a frequently-asked-questions document on September 25, 2026, clarifying that announcing a token buyback program on a functional network does not constitute a promise of essential managerial efforts
• ▪The U.S. Securities and Exchange Commission's Division of Corporation Finance warned that announcing a token buyback program on an unfinished, non-functional network could be considered an investment contract if the issuer presents it as creating yield or returns

Activities on functional networks

• ▪The U.S. Securities and Exchange Commission's Division of Corporation Finance clarified that once a crypto network is functional, funding development projects to secure, maintain, or improve the system does not constitute the managerial effort that makes a token a security
• ▪The U.S. Securities and Exchange Commission's Division of Corporation Finance stated that marketing a functional network's existing uses or discussing future features generally does not create an expectation of profit under the Howey test, provided the statements do not promote profit potential

Resignation of Hester Peirce

• ▪U.S. Securities and Exchange Commission Commissioner Hester Peirce announced she will resign from her position on October 2, 2026, to become an associate professor at Regent University School of Law
• ▪Following Hester Peirce's scheduled departure on October 2, 2026, the U.S. Securities and Exchange Commission will be left with only two members, Chairman Paul Atkins and Commissioner Mark Uyeda

Status and origin of the FAQs

• ▪The U.S. Securities and Exchange Commission's Division of Corporation Finance noted that its September 25, 2026 crypto FAQs represent staff views, are not Commission rules, and have no legal force or effect
• ▪The U.S. Securities and Exchange Commission's September 25, 2026 crypto FAQs build on an interpretive release from March 17, 2026, which the Commodity Futures Trading Commission joined

Debatable claims

• ▪Ongoing developer funding for functional networks does not make their tokens securities
• ▪Token buybacks on unfinished networks inherently constitute investment contracts
• ▪Hester Peirce's SEC tenure successfully fostered crypto innovation
• ▪Informal staff guidance is an inadequate substitute for formal SEC rulemaking