Home›Crypto›Regulation›SEC guidance says token buybacks do not imply manageri…

SEC guidance says token buybacks do not imply managerial promises

The SEC also warned that even ongoing network maintenance or upgrading may not satisfy the Howey test if statements are framed around profit expectations.

Reported · Written up by our desk · Regulation

Decrypt reports the SEC’s Division of Corporation Finance updated its crypto FAQ, clarifying that once a network is functional, announcing a token buyback is not considered a promise of “essential managerial efforts” under the Howey test.

The outlet notes the Howey test focuses on whether buyers expect a company to work and generate profits, and the SEC staff said announcing a buyback alone does not amount to that type of promise.

Decrypt further reports the SEC staff expanded the guidance by saying that maintaining, upgrading, or growing a functional network does not satisfy Howey, and it also flagged that promotional material, including vague aspirational statements, may not be enough if it effectively touts profit.

The piece adds that Gabriel Shapiro, a securities attorney at MetaLeX Labs and former general counsel at Delphi Labs, said the buyback guidance goes further than he expected.

More like this

Sources