SEC staff have signaled that token buybacks and the continued development of a functional crypto network may not, by themselves, meet the Howey test used to decide whether an asset is being sold as a security. The comment was reported on September 26, 2026 by crypto news account WuBlockchain, citing SEC staff. It centers on two activities that token projects have long treated as legal gray areas.
The framing matters because the Howey test has been the backbone of nearly every US token enforcement case. If staff read buybacks and ongoing engineering work as activities that do not automatically create an investment contract, that narrows one of the arguments regulators have used against token issuers.
The two activities in question
Two behaviors are named in the guidance. The first is token buybacks, where a project or its treasury uses revenue or reserves to repurchase its own token from the market. The second is the continued development of a functional network, meaning teams shipping upgrades, maintaining infrastructure, and improving a chain or protocol after a token is already live and in use.
Both have historically been cited as evidence of an investment contract. A buyback can look like an issuer trying to support a price, which regulators have linked to the "expectation of profit" prong of Howey. Ongoing development by a central team can look like the "efforts of others" prong, the idea that buyers are relying on a promoter's work for returns. Staff suggesting these actions may not trigger Howey on their own is a shift in emphasis, though the underlying facts of any specific token still control.
Howey, and what a "functional network" implies
The Howey test asks whether there is an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. All prongs generally need to be present. The word "functional" is doing real work here. A network that people actually use for payments, computation, or settlement is easier to describe as a consumptive product than as a pure investment bet, which is the distinction issuers have argued for years.
As analysis rather than established law, the reasoning tracks a long-running industry position: once a network is operational and sufficiently decentralized, the token behaves more like a tool for using that network than a share in a company. That argument has appeared in prior SEC commentary about specific assets. Applying it to buybacks and maintenance development extends it to what teams do after launch, not just at the token's birth.
The limits of staff commentary
This is staff commentary, not a rule, an enforcement action, or a court decision. Staff views do not carry the force of law and can be revised. They also do not immunize any particular token, because Howey turns on the full set of facts around how an asset is marketed and sold. A project running a buyback while promising price appreciation to buyers is a different case from one repurchasing tokens as part of routine treasury management.
The reporting is based on a single source at the time of writing, and the underlying staff statement was not linked in the post. Readers should treat the specifics as preliminary until the SEC publishes the guidance directly or it is confirmed through official channels.
Classification shapes which tokens reach cards and wallets
Securities classification is not an abstract legal question for people who spend crypto. It shapes which tokens US-facing platforms are willing to list, custody, or route through a card. When an asset's status is uncertain, exchanges and card issuers tend to delist or geo-block it for American users to avoid liability, which is why some tokens are spendable in one country and unavailable in another. Clearer boundaries reduce that friction.
Buyback clarity is also relevant to the reward-token and exchange-token models that sit behind several crypto cards. Programs that stake or hold a native token for cashback rewards or tier benefits depend on that token remaining tradable and listable in the US. A regulatory read that treats buybacks and maintenance as ordinary business, rather than as signals of a securities offering, lowers one risk hanging over those designs. The story sits alongside a run of 2026 US regulatory developments, from the Federal Reserve's first stablecoin rules under the GENIUS Act to the CFTC's move to let commodities firms hold tokenized assets.
None of this changes the law today. It is a reading of how staff may view two common activities, and it will matter most if the SEC formalizes it or a court adopts similar logic.
Overview
SEC staff signaled that token buybacks and continued development of a functional crypto network may not, on their own, satisfy the Howey test for a securities offering, per reporting on September 26, 2026. The comment narrows two arguments regulators have used against token issuers, but it is staff commentary rather than binding law, and Howey still depends on the specific facts of each token. For US crypto users, cleaner classification boundaries influence which tokens stay listable, custodial, and spendable through cards and wallets.
