SEC Staff Say Buybacks on Functional Networks Are Not Investment Contracts; a16z Calls It a Loophole
SEC staff cleared non-security token buybacks on functional networks under the Howey test, but a16z called the guidance a loophole other sides dispute.
Why it matters
The staff guidance gives projects running buybacks on functional networks a stated basis for arguing a buyback announcement alone is not an investment-contract promise, which could reduce registration pressure for large programs such as those run by Hyperliquid and Pump.fun. Because the position is staff guidance rather than a rule, a future administration could take a different view, which is the risk a16z raised. Its effect is limited for now: no enforcement action or formal rulemaking follows from it in this evidence.
Where the sources disagree
Whether the SEC endorses a16z's reading of the buyback guidance
a16z calls the FAQ a loophole usable against the industry by the next administration
Crypto News (CryptoNews.net)
Not every industry leader agrees with a16z, and the SEC does not either
Crypto News (CryptoNews.net)
Crypto News said the SEC itself does not accept a16z's interpretation of the FAQ, framing a16z's loophole claim as contested within the industry.
Scope of the SEC's buyback position
SEC staff clarified when live tokens, buybacks and staking receipts are not securities
Crypto News (CryptoNews.net)
Answer applies to functional networks and rests on the assumption the token already sits outside securities treatment
CryptoSlate
Crypto News framed the clarification as covering live tokens, buybacks and staking receipts, while CryptoSlate reported the position narrowly as a staff answer about functional networks and assumed a token already treated as a non-security.
Key facts
SEC Division of Corporation Finance staff said an issuer's buyback announcement for a non-security crypto asset on a functional network falls outside the promises of essential managerial efforts at the center of the Howey test.
Reported by Crypto News (CryptoNews.net)
The guidance warns that on a network not yet functional, presenting a buyback as a source of yield or returns can support an investment-contract analysis and require SEC registration.
Reported by Crypto News (CryptoNews.net)
a16z called the SEC's buyback guidance a loophole that the next administration could turn against the crypto industry.
Reported by Crypto News (CryptoNews.net)
Crypto News reported that not every industry leader agrees with a16z's reading of the FAQ, and said the SEC itself does not share it.
Disputed figureReported by Crypto News (CryptoNews.net)
Uniswap CEO Hayden Adams called the SEC clarification bangers, after Uniswap had stayed away from buybacks while afraid of Biden-era SEC enforcement and began UNI buybacks last year.
Reported by Crypto News (CryptoNews.net)
Allium Labs data put crypto token buybacks at a record $638 million through late August 2026, up from $545 million over the same period of 2025.
638,000,000 USDReported by CryptoSlate
Hyperliquid accounted for roughly $370 million and Pump.fun for about $200 million of 2026 buybacks, together close to 90% of the total.
370,000,000 USDReported by CryptoSlate
Crypto News reported that PUMP rebounded from $0.0038 to a daily high of $0.0046 and traded near $0.0045, up 18% on the day, on a 57% rise in spot volume, with DefiLlama showing $24 million in USD inflows after four straight days of declines.
18 %Reported by Crypto News (CryptoNews.net)
What happened
On September 25, staff at the SEC's Division of Corporation Finance answered questions about crypto token buybacks, saying an issuer's announcement of a buyback program for a non-security crypto asset on an already functional network falls outside the promises of essential managerial efforts at the center of the Howey test. The same answer warned that on a network not yet functional, promoting a buyback as a source of yield or returns can feed into an investment-contract analysis requiring registration, and the answer assumes both a functional system and a token already treated as a non-security. Crypto venture firm a16z called the guidance a loophole that the next administration could use against the industry, but Crypto News reported that not every industry leader accepts that reading, including the SEC itself, while Uniswap CEO Hayden Adams called the clarification bangers. Buyback activity has been large: CryptoSlate cited Allium Labs data putting crypto token buybacks at a record $638 million through late August 2026, up from $545 million over the same stretch of 2025, with Hyperliquid at roughly $370 million and Pump.fun at about $200 million together close to 90% of the total. Crypto News linked the clarification to a rebound in PUMP, which recovered from $0.0038 to a daily high of $0.0046 and traded around $0.0045, up 18% on the day on a 57% jump in spot volume, with DefiLlama showing $24 million in USD inflows after four consecutive days of declines. What remains unclear is how durable a16z's concern is: the guidance is staff-level rather than a rule or formal interpretation, and no formal SEC action on a specific project is described in the coverage.
How the story developed
- Official statement
SEC staff publish crypto buyback FAQs on functional networks
Division of Corporation Finance staff say a non-security token buyback announcement on a functional network is not a promise of essential managerial efforts, and warn that on non-functional networks a buyback pitched as yield can support an investment-contract analysis.
- Update
a16z criticises the buyback FAQ as a loophole
The venture firm flagged the guidance as something the next administration could use against the industry; Crypto News reported that other industry leaders, and the SEC, reject that reading.
- First report
First report by Crypto News (CryptoNews.net)
‘Biggest loophole ever?’ a16z challenges SEC crypto buyback FAQ
- Independent corroboration
Independently corroborated by CryptoSlate
SEC clears regulatory hurdle as crypto token buybacks hit record $638 million
- Update
Record buyback volume and Hyperliquid, Pump.fun concentration detailed
CryptoSlate reported Allium Labs data of $638 million in token buybacks through late August 2026, with Hyperliquid at roughly $370 million and Pump.fun at about $200 million.
- Correction
Correction published by Crypto News (CryptoNews.net)
All about PUMP’s 18% surge after SEC’s clarification, 398M token buybacks
- Update
PUMP rallies after the clarification
PUMP recovered from $0.0038 to a daily high of $0.0046, up 18% on spot volume up 57%, with $24 million in USD inflows after four days of outflows.
How coverage built up
Independent sources over time, counted the way the consensus panel counts them: a republication of a wire story does not move the line.
- 26 Sept 2026, 17:26 UTC: Crypto News (CryptoNews.net) — 1 independent source, 1 reports
- 26 Sept 2026, 20:20 UTC: CryptoSlate — 2 independent sources, 2 reports
- 27 Sept 2026, 00:17 UTC: Crypto News (CryptoNews.net) — 3 independent sources, 3 reports
Affected entities
Also mentioned: Ethereum
Original sources
| Publisher | Report | Role | Published |
|---|---|---|---|
| Crypto News (CryptoNews.net) Aggregator | ‘Biggest loophole ever?’ a16z challenges SEC crypto buyback FAQ | Original | |
| CryptoSlate Crypto media | SEC clears regulatory hurdle as crypto token buybacks hit record $638 million | Independent | |
| Crypto News (CryptoNews.net) Aggregator | All about PUMP’s 18% surge after SEC’s clarification, 398M token buybacks | Syndicated |
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