Crypto projects have collectively allocated roughly $638 million to token repurchase programs through late August 2026, eclipsing the $545 million recorded for the same period in 2025. The bulk of this activity stems from Hyperliquid, which has bought and destroyed about $1.3 billion worth of its native token, and Pump.fun, whose open-market purchases amount to roughly $200 million.

SEC Staff Clarify Buyback Rules

On September 25, the Securities and Exchange Commission’s Division of Corporation Finance released a new set of frequently asked questions addressing token buybacks on functional networks. The guidance states that announcing a repurchase for a token that is already operating outside the securities framework does not constitute an “essential managerial effort” under the Howey test. In contrast, projects that market buybacks as a source of yield on pre-functional or still-developing networks could still trigger securities-law analysis.

The staff’s position rests on two assumptions: the network must be functional—meaning the token can be used for its intended purpose—and the token must already be classified as a non-security. While the staff’s view does not carry binding legal authority, it reflects the agency’s current thinking.

Emerging Regulatory Lifecycle

The SEC’s March interpretation outlines a lifecycle for token projects. Initially, a token may be sold as part of an investment contract tied to promised managerial work. Once the promised milestones are achieved or abandoned, the project can transition out of the securities-law regime. The forthcoming Regulation Crypto Assets proposal would create a safe-harbor exemption for startups raising up to $5 million over four years, and a larger exemption for up to $75 million annually, both subject to disclosure requirements.

Proposed Rule 400 introduces Form TR, a transition filing that issuers would submit on EDGAR to certify that they have either completed or permanently ceased the promised managerial efforts. The SEC could later challenge the adequacy of those certifications. The agency estimates that about 475 issuers per year could qualify for this safe harbor, based on roughly 15% of the 3,165 projects launched in 2024.

How Projects Are Deploying Buybacks

  • Pump.fun directs half of its revenue—approximately $500 million annually—toward open-market purchases and permanent token burns, resulting in about $462 million of cumulative buybacks and the destruction of 167.7 billion tokens.
  • Hyperliquid funnels more than $1 billion of annualized trading fees into systematic token repurchases and burns, having already removed $1.3 billion of its token from circulation.
  • Uniswap activated protocol fees on Ethereum in December 2025 and has since expanded the mechanism to other chains, allowing fee collectors to obtain UNI by burning the token.
  • Aave used treasury funds to acquire over 205,000 AAVE for roughly $42 million in its first ten months, though governance later paused purchases amid revenue pressures.

These programs illustrate a shift from pure fundraising toward revenue-backed token economics. However, the net effect on supply depends on the balance between buybacks, burns, and ongoing token emissions. For instance, Hyperliquid’s model includes staking rewards and future emissions that can offset the supply reduction from burns.

Why it matters

The SEC’s clarification provides a framework that could encourage more mature crypto projects to adopt revenue-funded buyback strategies without immediately inviting securities-law scrutiny. By delineating a clear transition path—from fundraising under an investment-contract analysis to a functional network capable of autonomous repurchases—the agency signals that well-structured token economics may coexist with existing regulatory expectations. This guidance, coupled with the pending safe-harbor provisions, may shape how new and existing projects design their tokenomics, potentially influencing capital allocation, governance decisions, and investor confidence across the broader crypto ecosystem.