The U.S. Securities and Exchange Commission (SEC) updated its non-binding staff guidance on crypto token buybacks on Sept. 28, adding a condition that a project's underlying system must have "no central party" to prevent buyback announcements from being viewed as managerial promises. The update came just three days after initial guidance on Sept. 25 allowed functional crypto systems to announce repurchases without implying managerial effort. The regulatory shift arrives as crypto projects reached a record $638 million in token buybacks through late August.
SEC Defines Centralized Control Limits
Under the revised Sept. 28 FAQ response, an issuer's buyback announcement for a non-security crypto asset will not automatically constitute a promise of essential managerial efforts if the network is functional and lacks a central authority. If a system is not yet functional, SEC staff warned that buyback announcements framed as generating yield or holder returns could be classified as managerial promises.
This follows the SEC's March crypto-asset interpretation, which defined a central party as any individual, firm, or entity maintaining operational, economic, or voting control. While treasury management alone does not classify an entire network as centralized, discretionary buybacks serve as potential evidence of economic control, particularly as U.S. crypto agency rules remain fragile without broader legislative frameworks.
Discretionary Powers at Pump.fun and Aave
The update highlights practical questions regarding project governance structures across major decentralized protocols:
- Pump.fun: Disclosed on April 28 that 50% of defined platform revenue was allocated to be burned programmatically over one year starting April 28. Automated code deployed before April 28, 2026 UTC (or April 29 per its token page) executes set repurchases, but non-automated purchases remain subject to operational discretion.
- Aave: On Feb. 28, DAO service provider TokenLogic disclosed that the Aave Finance Committee held power to adjust weekly AAVE buyback volumes within a 75% margin. The committee allocated $42 million to acquire over 205,000 AAVE over 10 months before pausing buybacks on April 19 following an rsETH bridge incident on April 18. The pause was formally cited in an April 22 notice. Governance dynamics around protocol treasuries remain pivotal as entities weigh broader operational updates like Sentora's isolated Aave V4 proposal.
Why It Matters
This guidance revision creates immediate compliance friction for DAOs and crypto companies that mix automated smart contracts with human treasury management. By forcing issuers to demonstrate complete absence of central economic control, the SEC effectively limits how flexible token buybacks can be without risking security classification. Protocols using discretionary committees to adjust or halt repurchase programs may need to fully automate their buyback structures or face heightened regulatory enforcement.
