The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on Tuesday issued joint guidance that clarifies how federal securities laws apply to many crypto assets, a move aimed at ending years of regulatory uncertainty. 

The agencies said the interpretation makes clear that the bulk of digital tokens are not securities, while laying out how certain transactions and token evolutions can bring them within, or remove them from, securities regulation.

In the official release, the SEC framed the guidance as a milestone in its effort to provide clearer rules for market participants and to complement ongoing Congressional work to codify a comprehensive market-structure framework. 

“After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws,” SEC Chairman Paul S. Atkins said. 

Chair Atkins added that the interpretation recognizes something the previous administration did not fully acknowledge: most crypto assets are not securities. 

The guidance also acknowledges that investment-contract status can end — a point Atkins said will help entrepreneurs and investors while Congress advances bipartisan market-structure legislation (CLARITY Act).

The CFTC joined the SEC’s interpretation and signaled it will administer the Commodity Exchange Act in a manner consistent with the SEC’s approach. Together, the agencies provided a more detailed taxonomy to help classify digital assets and the activities that surround them.

Key elements of the interpretation include a structured token taxonomy that separates digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. 

This categorization is intended to reduce ambiguity about which regulatory regime applies to different types of tokens and, by extension, to the platforms and services that handle them.

The guidance also addresses the dynamic nature of token classification. It clarifies how a “non-security crypto asset” — defined as a crypto asset that is not itself a security — may become subject to securities rules, and how it may cease to be treated as an investment contract over time. 

The interpretation further explains how federal securities laws apply to airdrops, protocol mining, protocol staking, and the practice of “wrapping” a non-security crypto asset. The statement concludes:

Market participants—from innovators and issuers to individual investors—should review this interpretation to better understand the regulatory jurisdiction between the SEC and CFTC. The interpretation will be published on SEC.gov and in the Federal Register. 

Featured image from OpenArt, chart from TradingView.com 

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