On March 17, 2026, the U.S. Securities and Exchange Commission (SEC) issued an interpretation providing additional clarity on how federal securities laws apply to crypto assets and related transactions. For an industry that has developed alongside limited regulatory interpretations, this guidance reflects the SEC’s effort to further articulate how securities laws apply to crypto assets.
Historically, the SEC has relied on the Howey test—a legal standard used to determine whether an arrangement involves an “investment contract”—to assess whether crypto assets fall within the definition of a security. While flexible, that approach has required case-by-case analysis of how the Howey test (under prior administrations) applies to digital asset arrangements. In the absence of a bespoke regulatory framework specific to crypto assets, the SEC has applied existing securities laws through a combination of interpretive guidance and enforcement actions. The new interpretation establishes four categories of crypto assets that would not be considered securities, and is a first step towards providing additional clarity around the SEC’s treatment of crypto assets that are offered and sold as part of an investment contract.
A central feature of the interpretation is the introduction of a functional taxonomy for crypto assets, which groups digital assets based on what they are designed to do and how they are used in practice:
- Digital Commodities – Not securities; crypto assets that are intrinsically linked to and derive their value from the programmatic operation of a crypto system that is “functional,” as well as supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others
- Digital Collectibles – Not securities; crypto assets that are designed to be collected and/or used and may represent or convey rights to artwork, music, videos, trading cards, in-game items, or digital representations or references to internet memes, characters, current events, or trends, among other things
- Digital Tools – Not securities; assets that perform a practical function, such as a membership, ticket, credential, title instrument, or identity badge, rather than an investment opportunity
- Stablecoins (GENIUS Act stablecoins) – Not securities; defined in the GENIUS Act as a “payment stablecoin issued by a permitted payment stablecoin issuer”
- Digital Securities – Securities; financial instruments enumerated in the definition of “security” that are formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks
This framework provides a structured way to evaluate how federal securities laws may apply, based on the role a particular crypto asset plays within a broader ecosystem.
The SEC reiterates that classification depends also on the context in which a crypto asset is offered and sold. A non-security crypto asset may be part of an investment contract—and therefore subject to securities laws—if it is offered in a way that leads purchasers to reasonably expect profits based on the managerial or entrepreneurial efforts of others (for example, a development team building or promoting a project). The interpretation also explains that this status may change over time. A crypto asset may cease to be subject to an investment contract when the investment contract terminates—either because the issuer has fulfilled its representations or promises, or because the issuer has failed to satisfy its representations or promises. The SEC also took the position that the investment contract could continue to exist during secondary trading of a crypto asset, which is a departure from the Clarity Act’s framework.
The interpretation provides additional clarity on several common activities within the crypto ecosystem:
- Protocol mining and staking – Activities used to help validate transactions and maintain blockchain networks; generally not treated as securities transactions
- Token wrapping – A process that allows a non-security crypto asset to be used on a different blockchain network; not treated as a securities transaction
- Airdrops – Distributions of tokens (often for promotional or network-building purposes); typically do not involve an “investment of money” under the Howey test
These clarifications are particularly relevant for developers and users engaging in routine blockchain operations.
The Commodity Futures Trading Commission (CFTC) joined the SEC in issuing this interpretation, indicating a coordinated regulatory approach. The agencies noted that certain non-security crypto assets may fall within the definition of a “commodity” under the Commodity Exchange Act. This coordination may help clarify how regulatory responsibility is divided between the SEC and CFTC.
While this interpretation does not replace the need for legislative action, it provides additional insight into how existing laws apply to digital assets. For crypto companies, investors, and financial institutions, the message is clear: the SEC is moving toward providing greater clarity on how federal securities laws apply to digital assets, offering additional insight into its current regulatory approach. As noted in Chairman Atkin’s remarks on Regulation Crypto Assets at the DC Blockchain Summit, we would expect more to come from the SEC on this topic.
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