PUMP jumped 18% in a single day after US Securities and Exchange Commission (SEC) staff clarified when live tokens, token buybacks, and liquid staking receipts fall outside securities regulation — a development seen as a boost for projects that channel protocol revenue into buybacks.

SEC Clarifies Howey Test Application

The SEC said it continues to apply the classic Howey test to determine whether crypto assets and token sales constitute securities under federal law. According to the agency, the assessment centers on economic reality rather than terminology: a digital asset falls under securities rules when investors anticipate profits driven by the managerial efforts of founders.

The SEC also stated that buybacks do not turn a commodity into a security, and that the same holds for liquid staking.

The Howey framework originates from a 1946 US Supreme Court ruling and has long anchored US securities analysis of digital assets. Because token repurchases can be read as efforts to lift value for holders — the type of profit expectation Howey was designed to capture — the treatment of buybacks has been a recurring point of uncertainty for projects that route revenue back to tokenholders.

PUMP's Market Reaction

Following the clarification, PUMP staged a sharp rebound. The token recovered from a dip to $0.0038, reclaimed and flipped the $0.004 level, and rallied to a daily high of $0.0046. At the time of writing, PUMP traded near $0.0045, up 18% on the daily chart, while spot trading volume surged 57%.

The guidance speaks directly to PUMP's structure, which channels protocol revenue into token repurchases that are then permanently removed from circulation — the same mechanism at the center of the SEC's statement.

Capital Flows Return to Positive Territory

The PUMP network also fresh capital inflows. According to DefiLlama, the protocol's USD inflows rose to $24 million — a notable reversal after four consecutive days of declines that had pushed the metric into negative territory just over 24 hours earlier, indicating that more funds were entering the network than leaving it.

The project's buyback activity has continued in parallel. After generating $3.2 million in revenue, PUMP spent $1.6 million to purchase 398 million tokens, according to data from Lbexplorer. In total, the team has bought and burned $463.79 million worth of PUMP, removing 16.79% of the total supply from circulation.

Profit-Taking Remains a Headwind

Despite the ongoing supply reduction, sellers continued to lock in even marginal gains. On September 26, spot sell volume rose to 2.68 billion while buy volume fell to 2.54 billion, driving the buy-sell delta down to -144.5 million — a clear sign of aggressive spot selling.

Exchange-level data reflected the same pattern. Spot netflow has stayed positive for three consecutive days, jumping to $1.49 million after PUMP rebounded from its recent slip.

Whether the buy-sell delta swings back into positive territory will be one measure of whether incoming demand is keeping pace with profit-taking.

Technical Picture Points to Continued Momentum

Upside momentum appeared intact at the time of writing. The Trend Strength Index (TSI) formed a bullish crossover and rose to 6.8, while the Aroon oscillator held near 42 for two consecutive days, signaling stabilizing upward momentum. Taken together, the two readings suggest the current trend could continue.

If favorable conditions persist, the token could reclaim $0.0048 and target a break above $0.005. Conversely, sustained profit-taking could stall the advance and send PUMP back toward $0.0038.

Alongside those levels, the near-term markers to watch include whether DefiLlama inflows build on the rebound, whether exchange netflows extend their three-day positive streak, and whether the buyback cadence captured by Lbexplorer holds its pace.

The rally underscored improving sentiment around PUMP following the SEC's latest clarification, with the buyback program providing continued support even as exchange data showed sellers remaining active.