The SEC’s Division of Corporation Finance recently updated its cryptocurrency FAQ, introducing what many consider the most significant regulatory clarification of the year. The update establishes that once a blockchain network achieves functional status, announcing a token buyback does not constitute a promise of “essential managerial efforts.”
Under the Howey test, an asset is classified as a security if buyers expect profits derived from the managerial efforts of others. By clarifying that a mere announcement of a buyback does not fit this criteria, the SEC has provided substantial relief to crypto protocols that have operated in regulatory uncertainty.
The guidance extends beyond buybacks, stating that maintaining, upgrading, or growing a functional network does not satisfy the Howey test. Furthermore, promoting a network’s current functionality or making vague aspirational statements that do not tout profits is also exempt from this classification. Gabriel Shapiro, a securities attorney at MetaLeX Labs and former general counsel at Delphi Labs, noted that the buyback section “goes further than I expected,” suggesting that securities laws are becoming increasingly opt-in as the SEC adapts them to the crypto sector.
However, a strict boundary remains. If a network is not yet functional and the issuer promotes a buyback as a source of yield or returns for token holders, securities laws may still apply. The guidance acts as a filter rather than a blanket pass: protocols with a working product that repurchase their tokens are compliant, while those promising returns prior to product delivery remain exposed.
The primary beneficiaries of this regulatory shift include protocols tracked by DefiLlama that run active buyback programs with live revenue streams, such as HYPE, PUMP, ENA, AAVE, and SKY. For instance, Hyperliquid routes USDC reserve yield into HYPE buybacks, while Pump.fun has burned $451 million in tokens. Similarly, Pons allocates roughly 80% of its V1 revenue to buybacks, and Ethena holders voted to route 95% of net revenue to ENA. These projects, previously built in a legal gray zone, have now emerged into compliant territory.
Ultimately, the guidance validates the industry’s convergence on a specific model: treating tokens as claims on protocol cash flow rather than speculative bets on future development. With this regulatory approval, the “revenue meta” is firmly established, likely prompting a re-rating of fundamentally sound project tokens.
Macro Crypto and Markets
- Crypto majors are red after Bitcoin closed its highest week since January; BTC -2% at $83k, ETH -2% at $2,670, SOL -5% at $119, HYPE -4% at $90, ZEC -6% at $1,570
- Top alt movers include QNT (+45%), HBAR (+24%), PUMP (+12%), and Algo (+12%)
- Oil +4% at $96; Gold -3% at $4,185
- Stock futures are red as rates and oil go higher; DOW -0.5%, Nasdaq -0.8%
- Vitalik Buterin laid out where Ethereum goes by 2030, stating it will not function as a traditional blockchain; instead of every computer redoing the same math, most work will move off-chain and be verified with cryptographic proofs
- Solana’s upgrade to settle transactions in 150 milliseconds reached a second public test network, marking a step before going live
- Citi announced a partnership with Coinbase to provide stablecoin support for its institutional clients
- Prosecutors seized about $84 million from a payments firm that moved money for Tether and Bitfinex, claiming the firm lied to Wells Fargo and JPMorgan about its activities to secure bank accounts
- Analysts noted Binance’s $100 million investment in Circle helps USDC close the gap with Tether, as the deal positions USDC in front of the largest exchange’s users for the next five years
- Bitget reopened Bitcoin withdrawals Monday, four days after an attacker took about $388 million, with Ethereum coming Tuesday, USDT Wednesday, and everything else October 2; the exchange says it fixed the flaw and users keep their full balances
- One group took at least $18.43 million across 53 Robinhood Chain token launches between July 10 and September 21, according to analyst Wazz, mostly through Pons V2, with CRUMBS, LEGS, and PINK taking $3.12 million, $2.9 million, and $1.44 million respectively
Corporate Treasuries & ETFs
- The Bitcoin ETFs saw $135 million in net inflows on Friday and closed a massive $2.39 billion week; the ETH ETFs saw $87 million in inflows and closed a $690 million week
Meme Coin Tracker
- Meme leaders were down 5-7%; DOGE -5%, SHIB -5%, PEPE -4%, PENGU -5%, TRUMP -6%, SPX -7%, BONK -6%
- Robinhood chain leaders were mostly red; Pons -12% to $370 million, AI -2% at $222 million, Cashcat +5% at $188 million, with Wallet +115% and Delta +20% leading top movers
- Solana top movers were led by e/acc +100%, SI +20%, and Baton +50%; Ansem -7% to $160 million
- Binance announced support for Marscoin with its SPCX reflection and 牛来 with QQQ
What is happening in NFTs?
- NFT leaders were mostly red over the weekend; Punks even at 33.69 ETH, BAYC -10% at 6.25 ETH, Pudgy -4% at 3.27 ETH
- Ringers (+50%) and Kodas (+10%) led top movers
