Miles Jennings, head of policy and general counsel at a16z crypto, the crypto arm of venture-capital firm Andreessen Horowitz (a16z), blasted new guidance from U.S. securities regulators on X over how it treats token buybacks.
- The guidance came from the Securities and Exchange Commission's Division of Corporation Finance, the agency unit responsible for corporate disclosures and related interpretive guidance.
- In a set of FAQs published on Sept. 25, staff said that when a crypto system is already "functional," an issuer announcing a buyback of a non-security token wouldn't, by itself, amount to a promise to perform the kind of "essential managerial efforts" that can help create an investment contract under the Howey test.
If the system isn't yet functional, staff said a buyback announcement could count as such a promise when the issuer presents it as creating yield or returns for token holders.
And the SEC stressed that the FAQ represents staff views only, adding that it's not a Commission rule, has no legal force and was neither approved nor disapproved by the Commission itself.
And Jennings took issue with what the FAQ doesn't say.
"The lack of any distinction between programmatic buybacks and discretionary buybacks in this FAQ is wild," he wrote on X on Sept. 26, arguing that the language could potentially allow startups to tokenize revenue streams without triggering securities laws.
Miles Jennings
Hester Peirce, an SEC commissioner who leads the agency's Crypto Task Force, pushed back in a reply, saying projects with a central party can't rely on the buyback guidance.
That fits the SEC's broader March framework, which says a token is less likely to be tied to an investment contract once its value depends on a working crypto system rather than on a company or other central group continuing to make the project succeed.
- However, the wording of the new FAQ leaves room for argument.
- Question 2.5 (the section specifically addressing token buybacks) says that once a crypto system is "functional," announcing a buyback of a non-security token wouldn't count as a promise to perform the managerial work that can help trigger the Howey test.
- It doesn't explicitly say in that answer that the system must also have no central party.
- And that condition appears immediately above, in question 2.4, where SEC staff says a functional crypto system with "no central party" generally can't create a new investment contract merely through statements by an issuer.
- So the dispute is partly about how the FAQs should be read together. Peirce says the no-central-party limitation carries through; Jennings argues question 2.5, read on its own, is much broader.
One submission looks very familiar
The language itself didn't appear from nowhere, The Coinformer noticed after close review.
On March 20, Douro Labs, a crypto infrastructure company and an initial contributor to Pyth Network, submitted a 12-page comment responding to the SEC's March 17 crypto interpretation.
One of its four main requests dealt specifically with token buybacks.
Douro Labs described buybacks used for treasury management, supply reduction, protocol-funded burns and ecosystem rebalancing and asked whether announcing or executing such a program should count as a representation or promise to undertake "essential managerial efforts."
- In its comment, Douro Labs said buybacks shouldn't, by themselves, be treated as those essential managerial efforts.
- Six months later, the SEC staff FAQ asks whether buybacks used for treasury management, supply reduction, protocol-funded burns and rebalancing constitute a representation or promise to undertake "essential managerial efforts."
- Its answer, for a functional crypto system, is no.
There's no evidence, though, that Douro Labs received special treatment or that the SEC simply copied its proposal.
The comment was submitted publicly as part of the agency's normal feedback process. But the unusually close wording offers a clearer look at one industry submission that appears to have influenced, or at minimum anticipated, the staff's eventual clarification.
There is a Pyth connection
Douro Labs also had experience with the exact kind of token economics at issue.
Pyth Network, a decentralized oracle network that supplies financial-market data to blockchain applications, introduced the PYTH Reserve in December 2025.
The system directs part of the Pyth DAO treasury toward recurring open market purchases of PYTH tokens. The announcement describing the mechanism was contributed by Douro Labs.
Under a DAO proposal approved that month, the Pythian Council, a multisignature body acting for the Pyth DAO, was authorized to execute token purchases using one-third of the treasury balance at the time.
The treasury included revenue from Pyth Pro, a paid market-data product operated by Douro Labs, which sends 60% of subscription revenue to the DAO.
- That doesn't necessarily establish that Douro Labs sought the SEC clarification specifically for Pyth. Its March letter doesn't make that claim.
- But it does mean the firm asking regulators how revenue-linked token buybacks should be treated was already closely involved with an ecosystem using protocol revenue to fund recurring purchases of its native token.
The SEC had been warned about the distinction
Douro Labs wasn't the only commenter focused on buybacks.
On May 11, STORM Partners, a Geneva-based blockchain advisory firm, urged the SEC to distinguish between automated protocol mechanics and buybacks controlled by an issuer or another central party.
STORM argued that a buyback funded by business revenue and executed at an issuer's discretion is materially different from one carried out automatically by transparent code or decentralized governance.
It specifically told regulators to look at the source of the money, who controls execution and whether the mechanism is marketed as producing returns.
The final FAQ doesn't spell out that programmatic-versus-discretionary distinction.
And that is the gap Jennings is now attacking. The SEC staff says functionality matters, while Peirce says the presence of a central party takes a project outside the FAQ.
But the buyback answer itself leaves those finer distinctions largely unstated.