SEC and CFTC provide framework for crypto asset classification

The SEC and CFTC have released guidance on how federal securities laws apply to crypto assets and related activities, offering clarity on digital asset regulation. The interpretation outlines a taxonomy for crypto assets and clarifies the distinction between securities and non-securities, with an emphasis on activities like protocol mining, staking, and airdrops.

Key points

• Crypto Asset Categories:
  • Digital Commodities: Not securities, as they are linked to and derive their value from a crypto network’s function and market dynamics rather than from the expectation of profits from the essential managerial efforts of others. The agencies specifically identified BTC, ETH, SOL, XRP, ADA, AVAX, DOGE, DOT and others as digital commodities.
  • Digital Collectibles: Not securities, unless fractionalized and sold as investment contracts. Examples of digital collectibles include digital assets that convey rights to artwork, music, videos, trading cards, and in-game items. 
  • Digital Tools: Not securities, as they are valued for their functional utility rather than any expectation of profits from any essential managerial efforts of the developer. Examples of digital tools include Ethereum Name Service domain names and CoinDesk’s “Microcosms” NFT Consensus Ticket.
  • Stablecoins: Payment stablecoins issued by a permitted payment stablecoin issuer – i.e., GENIUS Act stablecoins, defined as a digital asset that is, or is designed to be, used as a means of payment or settlement, and the issuer of which generally is obligated to convert, redeem, or repurchase the digital asset for a fixed amount of monetary value, and represents that it will maintain, or create the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value – are not securities. Other stablecoins may or may not be securities depending on design.
  • Digital or “Tokenized” Securities: Are securities, because “[a] security is a security regardless of whether it is issued or otherwise represented, offchain or onchain.”
     
• Investment Contracts: The agencies also explained when a crypto asset or transaction may be treated as an investment contract under the Howey test. A non-security crypto asset becomes subject to an investment contract if it is offered in a way that encourages people to invest money in a shared enterprise, with promises that the issuer will take key actions to generate profits for investors. The determination depends on the issuer’s representations—where they come from, how they are communicated, and how detailed they are. The asset stops being subject to an investment contract once purchasers can no longer reasonably expect the issuer’s representations or promises to remain connected to the crypto asset, either because the issuer fulfills its promises or fails to do so.
   
• Mining and Staking:
  • Protocol Mining: Mining activities on proof-of-work (POW) networks are not considered securities transactions. Miners earn rewards by contributing their own computational resources to validate transactions, rather than relying on the managerial efforts of others. This remains true whether mining is done individually or through a mining pool, as the activity is viewed as a technical service rather than an investment contract. This applies where rewards are distributed on a pro rata basis according to each miner’s contribution. It does not extend to arrangements where participants can purchase interests or receive disproportionate rewards unrelated to their computational input.
  • Protocol Staking: Staking activities on proof-of-stake (POS) networks are not considered securities transactions if they adhere to specific models, as participants generally earn rewards through staking their own digital assets and contributing to network validation rather than relying on the managerial efforts of others. This applies across self-staking, delegated staking, custodial, and liquid staking arrangements where activities remain administrative or ministerial in nature. The agencies stated that arrangements involving returns that are guaranteed, fixed, or otherwise set by the operator, custodian or staking provider are outside the scope of the release.
     
• Wrapping and Airdrops:
  • Wrapping: Wrapping is not treated as a securities transaction when redeemable wrapped tokens function solely as one-for-one receipts for underlying non-security crypto assets and involve no profit expectation or managerial efforts. This does not extend to arrangements where wrapped tokens involve investment features or represent assets that are themselves securities or subject to an investment contract.
  • Airdrops: Airdrops are not treated as securities transactions where recipients receive tokens for free without providing consideration. Because there is no investment of money, the Howey test is not satisfied. Airdrops involving payments, services, or other consideration may be analyzed differently.

Economic and regulatory impact

This guidance provides clearer regulatory guardrails, reducing legal uncertainty for crypto issuers and market participants. It also offers potential for increased innovation and capital formation within the U.S. crypto market. The SEC and CFTC’s interpretation aims to harmonize crypto regulation and enhance market transparency.

The guidance became effective immediately (i.e., March 17, 2026) because the agencies categorize the guidance as an interpretive rule that is exempt from the Administrative Procedure Act’s notice and comment requirements. While immediate market clarity will likely be welcome, an interpretive rule is also easier to overturn than a formal rulemaking that is subject to the APA. 

The SEC is inviting further public comments on this framework, which will shape future regulatory approaches.

International entities considering entry into the U.S. market should: (1) analyze how their crypto assets are classified under applicable U.S. regulatory frameworks; (2) evaluate whether their activities involve U.S. persons or market infrastructure; (3) engage U.S. legal counsel to determine applicable registration requirements or available exemptions; and (4) monitor ongoing SEC and CFTC guidance, recognizing that interpretive frameworks may evolve over time.

Additional authors: Carolyn Rietig