Key Takeaways
What’s behind the pushback against former SEC execs?
They have been correcting the flawed view that crypto had clear rules even in 2017.
What’s the status of token buybacks?
Although they drive value accrual to token holders, at the time of writing, there was no formal classification of token buybacks or burns.
Armanda Fischer, a former SEC Chief of Staff, has stirred some debate following her claims on the status of token buybacks.
According to the exec, buybacks via DAOs (decentralized autonomous organizations) like Uniswap [UNI] can be deemed securities transactions, citing a 2017 SEC guidance.
She added,
“FYI: the crypto market structure legislation being contemplated by Congress & supported by the big crypto players generally would not allow token dividends/buybacks.”
However, crypto lawyers, including former U.S Senatorial candidate John Deaton, have slammed her claims. Deaton noted that the SEC’s 2017 directive was followed by 57 enforcement actions.
However, clearer guidance was issued in 2019 by former Chair Jay Clayton and more recently, by the Paul Atkins regime. These suggested that most tokens aren’t securities.
Deaton also pointed out that Amanda Fischer advised Biden-SEC to file a lawsuit against Ripple Labs, but XRP was finally cleared as a non-security. This was reinforced by Judge Analisa Torres.
He added,
“Here’s my response to Amanda, Gary Gensler, Jorge Tenreiro, and the rest of the old crew at the SEC: Shame on you…Take the loss with class.”
What’s next for token buybacks?
All the Biden-era SEC crypto enforcement actions were rolled back under the Trump administration. Only the secondary sale of XRP to institutional investors was found to be a securities transaction, but the token was a non-security.
Which raises the question – Are token buybacks really a securities transaction as Fischer claims?
Hyperliquid [HYPE], Pumpfun [PUMP], Aave [AAVE], Lido [LDO], and recently Uniswap [UNI] have doubled down on token buybacks to boost token holders’ value accrual.
Whether the ‘value accrual for token holders’ constitutes a securities transaction remains to be determined by the regulator. At the time of writing, there was no formal guidance on the same from the SEC.
In fact, Hayden Adams, Uniswap CEO, noted that the buyback move was only made because of the current pro-crypto SEC regime.
Other crypto lawyers, including former Uniswap CIO Marvin Ammori, also castigated Fischer’s position. Ammori quipped,
“If the law was so clear, why did her SEC lose so many cases in court?”
Source: X
By and large, the SEC’s treatment of crypto tokens has evolved since 2017. And, some instructions are about to be codified into law via the market structure bill.
However, only a formal regulatory directive on token buybacks could clarify whether it constitutes securities transactions or not.