SEC unveils landmark interpretive guidance, clarifying the application of federal securities laws to crypto assets

In the words of SEC Chairman Paul S. Atkins, “[a]fter 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. This is what regulatory agencies are supposed to do: draw clear lines in clear terms. It also acknowledges what the former administration refused to recognize – that most crypto assets are not themselves securities. And it reflects the reality that investment contracts can come to an end.”

The Interpretation—which applies prospectively—(1) classifies crypto assets into five categories and provides a coherent token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins and digital securities; (2) addresses how a “non-security crypto asset”, which is a crypto asset that itself is not a security, may become subject to, and how it may cease to be subject to, an investment contract; and (3) clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking and the wrapping of a non-security crypto asset.

The CFTC joined the SEC in the Interpretation and states that it will administer the Commodity Exchange Act consistently with this Interpretation and recognizes that certain non-security crypto assets may be commodities subject to the CFTC’s oversight.

The legal framework

The Interpretation is not intended to supersede or replace existing (and binding) legal precedent. The SEC reaffirms that Congress enacted a deliberately broad definition of “security” that turns on economic realities, encompassing enumerated instruments and elastic categories like “investment contract,” and that format or labels do not control. The Interpretation notes that federal courts and the Commission have long used the definition in SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (Howey) of an investment contract as an investment of money in a common enterprise with a reasonable expectation of profits from the efforts of others and that case law after In re Barkate, Release No. 3449542, 2004 WL 762434, at *3 n.13 (Apr. 8, 2004) also requires a common enterprise. The Interpretation emphasizes the importance of substance over form and stresses the Supreme Court’s instruction to focus on economic reality when applying the definition of “security.”

The new five-category taxonomy and security status

The Interpretation classifies crypto assets into five categories—digital commodities, digital collectibles, digital tools, stablecoins and digital securities—and analyzes each under the securities definition (though some crypto assets may not fit neatly into any single category or may exhibit hybrid characteristics spanning multiple categories). Digital commodities, digital collectibles, and digital tools, as defined in the Interpretation, are not themselves securities; stablecoins may or may not be securities depending on their characteristics and applicable statutes; and digital securities are securities by definition, regardless of tokenization.

• Digital Commodities: Digital commodities are crypto assets intrinsically linked to and deriving value from a functional crypto system’s programmatic operation and supply-demand dynamics, not from the expectation of profits from others’ essential managerial efforts. They are integral to network operation, including consensus participation, fee payments and governance, and, like commodities generally, derive value from utility and market dynamics. The Commission provides illustrative examples of widely known assets it views as digital commodities based on current characteristics but makes clear that a crypto asset need not underlie a futures contract to qualify. Because they do not have the economic characteristics of securities or represent digitized enumerated instruments, digital commodities, as described, are not securities.
• Digital Collectibles: Digital collectibles are crypto assets designed to be collected or used that may reference or convey rights to creative or cultural content or experiences; they typically do not provide rights to enterprise income or assets and often operate under end-user licenses. The Commission analogizes them to physical collectibles, noting their value reflects supply, demand, subject matter, popularity, or scarcity, not a purchaser’s reasonable expectation of profits from a creator’s essential managerial efforts after creation. The Commission cautions that fractionalization or similar structures can involve investment contracts even when the underlying collectible is not a security.
• Digital Tools: Digital tools are crypto assets that perform practical functions—such as memberships, tickets, or identity credentials—and whose value derives from their functionality rather than passive yield or enterprise claims. The Commission emphasizes they often are non-transferable or “soul-bound,” can be issued programmatically or by a central party, and, as described, are not securities because they lack the economic characteristics and enumerated instrument features associated with securities. While developer activity can affect utility, typical representations for digital tools do not promise essential managerial efforts that would create a reasonable expectation of profits.
• Stablecoins: Stablecoins are crypto assets designed to maintain a stable value relative to a reference asset, and the GENIUS Act excludes from the securities definition any “payment stablecoin issued by a permitted payment stablecoin issuer,” subject to that statute’s definitions and effective-date mechanics. Pending the GENIUS Act’s effectiveness, the SEC interprets that, for reasons set forth in the Division of Corporation Finance’s 2025 staff stablecoin statement, offers and sales of “Covered Stablecoins” (as defined in the GENIUS Act) do not involve securities, and payments stablecoins issued by registered foreign permitted issuers will generally be treated similarly even though not in the GENIUS Act’s statutory exclusion. Other stablecoins may meet the securities definition depending on facts and circumstances.
• Digital Securities: Digital securities—often referred to as tokenized securities—are instruments enumerated in the securities definition that are formatted as or represented by crypto assets with ownership recorded in whole or part on a crypto network, and they remain securities irrespective of tokenization. Models vary, and rights afforded onchain can differ from traditional formats, but tokenization does not alter securities status; a security is a security whether recorded onchain or offchain, and non-financial benefits layered onto a security do not change that conclusion.

Table 1: SEC/CFTC crypto asset taxonomy and security status at a glance

When a non-security crypto asset becomes, and ceases to be, subject to an investment contract

The SEC centers its analysis on the issuer’s marketing and promotion when non-security crypto assets are offered, emphasizing that explicit representations or promises to undertake essential managerial efforts that drive expected profits will create an investment contract when coupled with an investment of money in a common enterprise. Detailed business plans with milestones, resource commitments and causal links between the issuer’s efforts and anticipated profits are more likely to give rise to reasonable expectations of profit under Howey than vague or non-actionable statements. The SEC highlights familiar offering structures like immediate-delivery coin sales and delayed-delivery agreements for future tokens, explaining that the sale occurs upon entry into the agreement and that the non-security asset becomes subject to an investment contract at that time, regardless of delivery timing. The SEC is explicit that subjecting a non-security asset to an investment contract does not convert the asset itself into a security.

Separation occurs when purchasers can no longer reasonably expect the issuer’s represented essential managerial efforts to remain connected to the asset; once the issuer has fulfilled those representations or promises, the associated investment contract ceases to exist and subsequent offers or sales of the non-security asset are not securities transactions unless a new investment contract is created. The Commission underscores that failure to register an offering of an investment contract, or to qualify for an exemption, remains a violation with investor rights and antifraud exposure even if the asset later separates from the contract.³ The Interpretation encourages precise, time-bound disclosures of promised efforts and milestones, and public notice when promises are fulfilled, to clarify when separation is achieved.

Protocol Mining and Protocol Staking: activities that do not involve securities transactions as described

The Commission explains core crypto network mechanics, noting that public, permissionless networks use consensus mechanisms to validate transactions and maintain state without designated intermediaries, and then analyzes protocol mining on proof-of-work networks and protocol staking on proof-of-stake networks. In the interpretive view, protocol mining and specified protocol staking activities, conducted in the manners and circumstances described, do not involve offers or sales of securities and therefore do not require Securities Act registration or an exemption.

For self or solo staking, a node operator stakes its own digital commodities and contributes resources to participate in validation, qualifying for protocol-determined rewards; these activities do not involve a reasonable expectation of profits from the essential managerial efforts of others. For custodial arrangements, the custodian acts as agent, does not decide whether, when, or how much to stake on behalf of depositors, and any selection of a node operator is treated as administrative or ministerial; the custodian does not fix or guarantee reward amounts, though it may deduct fees. For liquid staking, a liquid staking provider stakes on behalf of depositors and issues staking receipt tokens evidencing ownership of the deposited digital commodities and rewards; provider actions parallel custodial arrangements and are not treated as essential managerial efforts in this interpretation.