The original answer, issued Sept. 25 and covered by The Defiant, referred only to a system being functional. The SEC’s comparison with the prior version marks the addition of “and has no central party,” and the FAQ dates that change to Sept. 28.
Under the SEC’s March interpretation, a central party is a person, entity or group with “operational, economic, or voting control of a crypto system.” Issuers whose systems remain under that control cannot point to functionality alone to fit the amended answer. The edit does not itself declare their buybacks to be securities transactions.
The FAQs are nonbinding staff views, not a Commission rule. They have no legal force or effect and do not change applicable law.
A Limit Peirce Had Already Signaled
SEC Commissioner Hester Peirce had articulated the narrower reading before the text changed. In a Sept. 25 exchange on X, she wrote: “Maybe it wasn’t clear, but if you have a central party, you can’t rely on this FAQ.”
Miles Jennings, a16z crypto’s head of policy and general counsel, disagreed at the time, arguing that only Question 2.4—not the buyback answer in Question 2.5—expressly contained that limitation.
Jennings welcomed the amendment on Sept. 28, saying the narrowing would “bolster its durability, while guarding against attempts to misconstrue it by those that wish to circumvent securities laws.”
The answer’s warning for systems that are not functional remains intact: a buyback announcement could constitute a promise of essential managerial efforts if the issuer presents it as creating yield or returns for token holders.