SEC clarifies when crypto token buybacks may imply securities promises

Frequently Asked Questions on the Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets Question 2.5: Issuers of non-security crypto assets may conduct buyback programs for several reasons, including treasury management, supply reduction, protocol-funded burns, and rebalancing. Does an issuer’s announcement of a non-security crypto asset buyback program constitute a representation or promise to undertake essential managerial efforts? Answer: Where a crypto system is functional and has no central party, an issuer’s announcement of a non-security crypto asset buyback program would not constitute a representation or promise to undertake essential managerial efforts. Where a crypto system is not functional, however, such an announcement could constitute a representation or promise to undertake essential managerial efforts if the issuer presents the buyback as creating yield or return for token holders.