SEC clarifies regulatory stance on crypto token buybacks

Crypto projects have reached a record $638 million in token buybacks as of late August 2026, with Hyperliquid and Pump.fun accounting for nearly 90% of the total. The SEC's Division of Corporation Finance recently issued guidance clarifying that buybacks for non-security tokens on functional networks do not inherently constitute investment contracts under the Howey test. However, the agency warned that projects on non-functional networks that market buybacks as a source of yield may still face securities law scrutiny. The SEC defines a network as functional when its token can be used for its programmed utility, a distinction that plays into the agency's broader framework for the regulatory life cycle of digital assets.