The U.S. SEC must be exhausted these past couple of days, having issued a flurry of announcements regarding crypto in rapid succession.
The U.S. Securities and Exchange Commission has engaged with crypto assets for over a decade, primarily applying the Supreme Court’s Howey test to determine if they fall under federal securities laws.
This approach often meant issuers faced permanent compliance obligations even after fulfilling their promises.
Before 2025, the SEC relied heavily on enforcement actions rather than a tailored framework.
To address these concerns and public input, the Commission issued this interpretation.
It provides clearer guidance on crypto assets, complements ongoing Congressional efforts for a comprehensive market structure, and is joined by the CFTC to ensure consistent treatment under the Commodity Exchange Act.
The interpretation establishes a coherent token taxonomy and clarifies when non-security crypto assets become or cease to be subject to investment contracts.
It also addresses the securities law implications for protocol mining, protocol staking, wrapping non-security assets, and certain airdrops.Crypto assets are classified into five categories:Digital commodities are not securities.
Their value derives from the functional operation of a decentralized blockchain system and supply-and-demand dynamics, not from the managerial efforts of others.Digital collectibles are not securities.
These represent digital artwork, music, videos, game items, memes, characters, or trends intended for collection or use.Digital tools are not securities.
They provide practical utility such as memberships, tickets, credentials, titles, or identity badges.Stablecoins that meet the GENIUS Act definition are not securities.
These are payment stablecoins issued by licensed issuers.Digital securities (tokenized securities) are securities.
These are traditional financial instruments recorded on blockchain networks.
A non-security crypto asset becomes subject to an investment contract when an issuer induces investment through promises of essential managerial efforts that purchasers reasonably expect will generate profits.
Such representations may come from various sources and must be sufficiently detailed.However, the investment contract terminates once the issuer fulfills its promises or fails to do so, after which the asset is no longer treated as a security.
The interpretation also confirms that protocol mining, protocol staking, wrapping of non-security crypto assets, and many airdrops do not involve the offer or sale of securities under the Howey test.