SEC, CFTC Update Crypto FAQs on Token Buybacks and Records
The SEC addressed token repurchases and network upgrades, while the CFTC outlined conditions for blockchain-based recordkeeping and tokenized assets.
The Securities and Exchange Commission and the Commodity Futures Trading Commission updated their crypto frequently asked questions, clarifying how token buybacks, network upgrades and blockchain records fit within existing rules.
The SEC said announcing a buyback plan for a token on an already operating network does not by itself make the token an investment contract. The analysis may differ when a network has not started and an issuer promotes buybacks as a source of returns for holders.
The updated guidance also says services that secure, maintain, improve or expand an operating crypto system, or help build network effects, are not necessarily managerial efforts under the Howey test. Marketing a network’s existing uses generally does not create an expectation of profit, and statements about future functions are treated similarly when they do not promote profit potential.
The CFTC said regulated firms may use blockchain systems for recordkeeping if they can still provide the records when the blockchain or its block explorer is unavailable. Futures commission merchants and clearinghouses may also invest client funds in tokenized versions of assets already permitted under existing rules, provided investment and custody requirements are met.
The SEC update emphasizes that outcomes remain dependent on the facts of each case. They come as the CLARITY Act has stalled in the Senate and regulators continue developing a crypto framework under existing law.
