On September 28, 2026, SEC staff updated their official FAQ on crypto-assets, providing long-awaited clarifications regarding token buybacks and network upgrades.
Here is what the SEC update actually says:
• No automatic reclassification: Token buyback programs or blockchain code upgrades do not automatically transform an asset into an investment contract (security).
• The operational and decentralized network condition: If the protocol is already fully functional and no central actor or entity controls or orchestrates these buybacks (e.g., via an autonomous treasury), the mechanism generally falls outside the definition of an investment contract.
• The pitfall of managerial promises: Conversely, if the network has not yet launched or relies heavily on a small group (such as an issuer or development team) that promotes these buybacks as a source of yield or return on investment for holders, the SEC will still apply the Howey test. The focus is on the actual organization behind the code: functional software is not enough if a central issuer still controls its economic future.
This clarification aligns with the SEC's new stance under the leadership of Paul Atkins in 2026, which aims to establish clear "rules of the road" for the sector rather than governing solely through enforcement actions.