Key Takeaways:
SEC's new FAQ clarifies that token buybacks on functional networks are not automatically securities offerings.
Crypto projects spent $638 million on buybacks in 2026, up from $545 million in 2025.
90% of that spending came from just two projects: Hyperliquid and Pump.fun.
Buyback-and-burn tokens have averaged -35% returns, excluding Hyperliquid.
The real question isn't whether buybacks are legal — it's whether they're funded by actual revenue.
Crypto Rover posted a simple observation this week: "THIS COULD BE THE NEXT BIG META IN ALTCOINS!" He pointed out that money has been rotating from one narrative to another — RWA tokens, then AI, then DeFi. Now, he says, token buybacks could be next.
He's not wrong about the pattern. But the data tells a more complicated story.
What the SEC Actually Said
On September 25, the SEC's Division of Corporation Finance published an updated FAQ on token buybacks. The key points:
For functional networks: If a crypto network is already functional, announcing a buyback doesn't, by itself, make the token a security. The "managerial efforts" prong of the Howey test isn't triggered.
For non-functional networks: If the network isn't functional yet, and the issuer presents the buyback as a "source of returns," securities laws may apply.
Marketing rules: Promoting existing uses of a network is generally fine. Promising future profits is not.
Gabriel Shapiro, a corporate securities attorney at MetaLeX Labs, wrote on X that the buyback section "goes further than I expected" and that regulators have "opened a loophole in a regulatory regime whose whole point was supposed to be that you couldn't draft your way around economic reality."
The Buyback Boom
Here's where the numbers get interesting.
Crypto projects spent **$638 million** on buybacks in 2026, according to data cited by Cointelegraph. That's up from $545 million in the same period in 2025. In 2024, the figure was just $366,000.
But the spending is heavily concentrated. Hyperliquid accounted for $370 million**. Pump.fun accounted for **$200 million. Together, that's 90% of all buyback spending. The remaining projects split just $68 million.
The performance gap is striking:
| Token | YTD Return |
|---|---|
| HYPE (Hyperliquid) | +145% |
| PUMP (Pump.fun) | +109% |
| UNI (Uniswap) | +20% |
| JUP (Jupiter) | +20% |
| Bitcoin | -10% |
Source: TradingView data cited by Cointelegraph.
But there's a catch. An analysis by Novora Research found that buyback-and-burn tokens delivered an average return of -35% — excluding Hyperliquid, that number drops to -56%. Of the 10 largest buyback tokens, only 3 outperformed Bitcoin.
Messari analyst Sunny Shi put it bluntly: "Our analysis finds no clear evidence that the market rewards these initiatives. Token performance remains driven by metrics growth and narrative formation."
Who's Buying Back — And How
Hyperliquid (HYPE): Uses 99% of its revenue for buybacks. Generated $169 million in revenue in Q2 2026, spent $141 million on buybacks.
Pump.fun (PUMP): Uses 50% of net revenue for buybacks. Annualized revenue of $420 million.
Travala (AVA): Doubled its monthly buyback. First cycle bought 739,762 AVA. Tokens are locked in a reserve wallet — permanently removed from circulation.
Ethena (ENA): A fee-switch proposal would allocate 95% of net revenue to ENA buybacks. The token rose 10.7% after the proposal.
Spark (SPK): Bought back 143 million SPK. But it didn't burn them — the tokens are held in treasury to reward long-term participants.
Lido (LDO): Plans regular buybacks once it achieves $40 million in annualized revenue.
Why Buybacks Are Attractive
Orest Gavryliak, Chief Legal Officer at 1inch, explained the appeal: "When projects implement revenue-funded buybacks and burns, they typically have one of two objectives in mind: either to decrease the token supply in circulation or to demonstrate the rationale for investing in protocol revenues."
He added: "Telling users a project has 'bought and burned tokens' is much more straightforward than explaining how governance rights work, how fees are set, or how the protocol is used."
Max Shannon, Senior Research Associate at Bitwise Europe, said: "Buybacks and burns remain an effective way to accrue value to tokenholders: they create a continuous bid in the open market for the token, directly tethering token success to the platform's adoption."
The Reality Check
Three problems remain.
1. Where does the money come from? Every dollar spent on buybacks is a dollar not spent on developer hiring, product development, or business expansion.
2. Only two projects dominate. 90% of buyback spending comes from Hyperliquid and Pump.fun. The mechanism works when there's revenue to fund it. Without revenue, it's just tokenomics theater.
3. Regulatory risk isn't gone. The FAQ is staff guidance — not legally binding. The SEC Commission hasn't approved or disapproved it. As Shapiro warned: "A private plaintiff or a future SEC could have other ideas."
Frequently Asked Questions
What did the SEC say about token buybacks?
The SEC's FAQ says buybacks on functional networks don't automatically make a token a security. But buybacks on non-functional networks, presented as a source of returns, may trigger securities laws.
How much have crypto projects spent on buybacks in 2026?
$638 million, up from $545 million in 2025. But 90% of that came from just two projects: Hyperliquid and Pump.fun.
Do buybacks actually improve token performance?
The data is mixed. HYPE and PUMP have outperformed, but the average buyback-and-burn token has returned -35% this year.
Is the SEC's guidance legally binding?
No. It's staff guidance. The SEC Commission hasn't voted on it, and future enforcement could take a different view.
Bottom line: The SEC's new FAQ gives token buybacks legal cover. But legal cover isn't the same as a working strategy. The projects that are winning with buybacks — Hyperliquid, Pump.fun — have real revenue to fund them. The rest are copying the mechanism without the engine. If buybacks become the next meta, the winners will be the ones who can actually afford it.
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