A Sept. 25 FAQ from the U.S. Securities and Exchange Commission’s Division of Corporation Finance has been read by some market participants as delivering two favorable signals: token issuers can buy back tokens, and teams can keep building after launch.
The TechFlowPost article by Daii argues that this reading misses the limits built into the document. The FAQ is not a license from the SEC Commission for a category of conduct. It is a staff-level response applying an existing analytical framework in more concrete terms. In the article’s framing, the Commission’s March 2026 interpretation introduced a lifecycle analysis, and the September FAQ made the buyback and post-launch development questions more specific.
The issue, then, is not simply whether a token is a security in the abstract. The article says the real question is whether the asset remains linked, in a contract, transaction, or arrangement, to promises made by the issuer, and whether purchasers still reasonably expect profits from the issuer’s essential managerial efforts.
This is not a blanket approval of token buybacks
Daii writes that the Sept. 25 FAQ is narrow and expressly labeled as staff guidance. The page states that it is not an SEC rule, regulation, or Commission statement, does not have independent legal force, and does not alter existing law.
The FAQ addresses non-security crypto assets where the related crypto system is already functional. Under those conditions, an issuer’s announcement of a buyback plan does not amount to a promise of the essential managerial efforts referenced in the Howey analysis.
The article identifies three limits that matter most:
- the asset must be a non-security crypto asset;
- the system must already be functional;
- the analysis concerns the buyback announcement itself.
The FAQ also says that if the system is not yet functional and the issuer markets the buyback as a source of gains or returns for token holders, that announcement may amount to a promise of essential managerial efforts.
For that reason, the article says projects cannot rewrite the FAQ as “the SEC approved token buybacks.” The document did not approve any specific project, and it did not say all buybacks fall outside securities law.
Language such as “we will use revenue to keep buying back tokens, so holders will benefit from business growth” could directly connect team operations to purchaser profit expectations. Whether that ultimately forms an investment contract would still depend on the full arrangement and all surrounding facts.
The narrower takeaway in the article is this: a buyback announcement does not automatically create an investment contract just because it uses the word “buyback,” and it does not automatically erase securities-law issues that may already exist.
The asset and the investment contract can be analyzed separately
The article treats this as the more important clarification. Under Howey, the inquiry is whether a contract, transaction, or arrangement involves an investment of money, a common enterprise, and a reasonable expectation of profits from the efforts of others. Labels, code form, or a “utility” tag are not decisive.
The SEC Commission interpretation and accompanying CFTC guidance took effect on March 23, 2026. According to the article, that interpretation says a crypto asset that is not itself a security can still be sold in an arrangement that is subject to an investment-contract analysis. Once purchasers no longer reasonably expect the issuer to carry out the essential managerial efforts tied to that arrangement, the asset may separate from the investment contract.
That shifts the inquiry to more concrete questions: who sold what, and when; what promises the issuer made that relate to essential managerial efforts; and whether purchasers still reasonably expect those promises to remain tied to the asset.
The interpretation lists examples of relevant promises, including developing specific functionality, completing software milestones in a roadmap, and opening related code. After the issuer completes the essential managerial efforts it promised, the article says, the asset does not have to remain permanently bound to the original investment contract even if the team continues software work that does not qualify as essential managerial effort.
Still, “mainnet launch” is not an automatic completion test. The interpretation says whether functionality or decentralization commitments have been fulfilled depends on how the issuer defined or described those goals when marketing the investment contract, not on industry shorthand that formed later.
The article gives two examples. If the promise was a payments network, normal block production alone cannot serve as the full acceptance standard. If the promise was a permissionless lending market, whether core powers remain in the hands of a single company may still matter in light of the original statements.
That is why white papers, websites, and fundraising materials may become important evidence of what purchasers were told. The article adds an important limit of its own: this is a practical inference from the interpretive documents, not a claim that every sentence in a white paper automatically becomes a legally binding contract term.
Post-launch development received only a limited clarification
On continued development after launch, FAQ Q2.3 is also narrow. It says that once a crypto system is functional, providing, sponsoring, or funding development to secure, maintain, improve, or enhance the system or its functionality, and to promote network effects, would generally not count as the kind of essential managerial effort referenced in the Howey analysis.
The article says this reflects a basic reality: software still needs security patches, client optimization, interface improvements, and developer tools after launch. A team continuing to write code is not, by itself, enough to show that holders still rely on the team to complete the enterprise tied to the original fundraising.
But the condition remains the same: the system must already be “functional.” The FAQ footnote, the article notes, expressly ties that term to the definition in Part III of the March interpretation.
That means Git commit counts alone cannot separate maintenance from undelivered development. Bug fixes and compatibility improvements are usually closer to maintenance. Completing core features promised at issuance, or creating new income rights and new profit promises, may require a fresh analysis.
From that, the article derives a practical evidence framework for projects:
- separate core functionality, acceptance standards, and future vision in issuance materials;
- distinguish work that must be completed before launch from maintenance after launch;
- keep records of versions, audits, permission changes, open-sourcing, and governance migration;
- publicly explain the basis for concluding that major commitments have been completed;
- for major upgrades, record whether they maintain the existing system or create new economic rights or new promises.
The article is explicit that this is not a mandatory checklist imposed line by line by regulators. It is a risk-management suggestion drawn from the fact-specific analysis in the documents.
Buyback design turns first on consistency between messaging and facts
The FAQ lists treasury management, supply reduction, protocol-funded burns, and rebalancing as possible reasons for buybacks. The article says those examples show that buybacks can serve different economic purposes and cannot be judged by name alone.
Projects still need to review the source of funds, who controls the decision, the language used externally, and the actual trading conduct. A rule that executes automatically under protocol logic is not the same fact pattern as a company deciding when to use future revenue to buy tokens. A pre-disclosed rule and a plan that the core team can pause based on price may also create different purchaser expectations.
Language matters, too. The article contrasts “treasury rebalancing” with “returning company growth to holders” as two different economic narratives. But wording is not the only factor. Regulators and courts would still look at the real arrangement rather than accept the project’s preferred label at face value.
The article also points to Regulation Crypto Assets, proposed by the SEC on Aug. 18, 2026. As of the review date in the article, it remains only a proposed rule. Its official project page says issuers using the proposed exemption would still be subject to the anti-fraud and anti-manipulation provisions of federal securities law.
So the FAQ cannot be treated as a shield against false statements, material omissions, or manipulative trading. Daii writes that disclosing a buyback policy’s budget, duration, authorizing body, pause conditions, and execution results would be a prudent way to reduce information asymmetry, while also noting that the FAQ does not set out those items as a uniform statutory checklist.
“Product first” is a risk-management conclusion, not a new rule
In the article’s reading, this framework is usually more favorable to projects that are already functional and whose key commitments can be verified. For “token first, development later” structures, it exposes more facts relevant to a Howey analysis.
If the system still cannot do what it was promoted to do, purchasers are effectively supplying development capital, and the project team expressly promises to use its engineering, operational, and market efforts to create adoption and profit opportunities, those facts may support an investment-contract analysis. Even so, the article stresses that the final conclusion still has to be made case by case. A project’s early stage does not automatically mean it violated securities law.
Daii lays out what the article calls a more stable sequence for projects:
- for early financing, choose equity, debt, compliant securities offerings, or other lawful tools based on the transaction’s real economic nature;
- before broad token distribution, make current functionality independently verifiable;
- separate present use from future vision and do not present roadmap items as already delivered facts;
- avoid claiming the system is already fully decentralized while also promising that insiders will raise token value through extensive future action;
- set completion standards for major commitments in a way that leaves evidence behind.
The article again says these are compliance suggestions inferred from regulatory texts, not a mandatory issuance order imposed by the SEC.
It also emphasizes that later separation does not erase earlier problems. The March interpretation says liability for unregistered offerings, and material misstatements or omissions made while the investment contract was still in place, do not disappear simply because the asset later separates from that contract.
CFTC update brings tokenized form into existing-rule analysis
The article also turns to the Commodity Futures Trading Commission. On Sept. 24, 2026, CFTC staff announced an FAQ update covering two topics: customer funds invested in tokenized forms of permitted investments, and the use of blockchain technology to satisfy recordkeeping requirements for registrants.
But the official release only confirms those two update themes. It does not set out all conditions in the new Q&A text. Daii writes that the FAQ PDF actually reviewed in the article was still the March version, containing only Q1 through Q11. Because of that, the article says it would be improper to invent the wording of any September additions beyond what the release itself confirms.
The March FAQ still establishes two narrower boundaries.
First, Q4 says Staff Letter 26-05 did not change the list of permitted investments for customer funds under Regulation 1.25, and futures commission merchants may not invest customer funds in payment stablecoins. Payment stablecoins may appear in other limited settings, but that does not make them permitted investments for customer funds.
Second, Q5 addresses uncleared swap collateral, not customer-fund investment. It allows tokenized forms of eligible collateral if the asset satisfies the existing regulatory requirements and gives the holder the same, or functionally equivalent, legal and economic rights as the traditional form.
The article repeats that this language comes from a narrower setting, eligible collateral for uncleared swaps. Without checking the text of any new September Q&A, it should not be transplanted wholesale into the customer-funds context.
The common direction that can be stated safely, the article says, is narrower: tokenization does not expand an existing asset list simply by changing the technical wrapper. Existing rules on investment, margin, custody, and risk still matter. The full conditions for the September customer-funds update should be taken from the updated FAQ text itself.
Projects need two working tables, not a “regulatory clearance” poster
The article closes with a practical suggestion. What projects need is not a poster saying regulators have waved them through, but two working tables.
The first is a commitments table. Projects can list important statements from white papers, websites, fundraising materials, founder interviews, and governance proposals, then record the audience, completion standard, responsible party, current status, and supporting evidence. The point is not to treat all marketing language as contract language. It is to identify which statements may lead purchasers to reasonably expect the team to complete work that determines the project’s success or failure.
The second is a rights-equivalence table. For stablecoins, tokenized Treasuries, fund shares, and other real-world assets, the article says projects should compare ownership, yield, redemption, transfer, custody, and bankruptcy treatment item by item between the traditional form and the tokenized form. A balance shown in a smart contract does not, by itself, prove that the holder has the same legal rights.
Looking at the SEC and CFTC materials together, the article says one direction can reasonably be inferred: regulatory analysis is paying closer attention to actual promises in a transaction, purchaser expectations, and underlying rights, rather than focusing only on whether blockchain is used. It also says that this is an integrated inference, not a joint policy statement from the two agencies.
The legal hierarchy still matters, and the article spells it out:
- the September SEC FAQ reflects only the views of Division of Corporation Finance staff and has no independent legal force;
- the March materials include an SEC Commission interpretation and CFTC guidance, but they do not replace binding case law;
- Regulation Crypto Assets remains a proposed rule as of the article’s review date;
- the CFTC FAQ is non-binding staff guidance and expressly does not create enforceable rights or new binding rules.
That leaves projects with more detailed analytical material, not an exemption from court review, private litigation, state law, anti-fraud duties, or regulation in other jurisdictions.
The article ends on the question it says still matters most. If an “upgrade” creates new income rights, a subnetwork, or a secondary token, is it maintenance of the old system or a new contract, transaction, or arrangement? The FAQ does not answer every variation. The inquiry still comes back to who promised what to whom, and whether purchasers reasonably expected profits from those efforts.