What It Means for the Industry

The SEC and CFTC have jointly issued a landmark interpretation clarifying how federal securities laws apply to crypto assets, officially establishing four categories of digital assets and confirming that most crypto tokens are not securities.

After more than a decade of legal ambiguity, U.S. regulators have drawn clearer lines around how crypto assets are treated under federal law. The joint interpretation, approved at the Commission level and set to be published in the Federal Register, is one of the most detailed attempts yet to map out which agency has jurisdiction over which type of digital asset.

What Did the SEC and CFTC Actually Announce?

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) released a joint interpretation on Tuesday that addresses how existing federal law applies to crypto assets and the transactions involving them.

SEC Chairman Paul S. Atkins stated: 

“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. This is what regulatory agencies are supposed to do: draw clear lines in clear terms.”

The guidance does several key things:

Introduces a formal token taxonomy with five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securitiesExplains how a non-security crypto asset can enter, and also exit, an investment contract classificationAddresses the regulatory treatment of airdrops, protocol mining, protocol staking, and token wrapping

CFTC Chairman Michael S. Selig added that the move reflects “a shared commitment to developing workable, harmonized regulations.” For years, companies operating in the U.S. crypto space had to guess whether a given token fell under SEC or CFTC oversight. That ambiguity has now been formally addressed, at least in part.

The Four Crypto Categories That Are Not Securities

One of the most significant aspects of the interpretation is the explicit confirmation that most crypto assets do not qualify as securities under federal law.

The SEC has outlined four categories of crypto assets that fall outside securities regulation:

1. Digital Commodities This includes mainstream assets like Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, Dogecoin (DOGE), Avalanche (AVAX), Aptos (APT), Bitcoin Cash (BCH), Hedera (HBAR), Algorand (ALGO), Litecoin (LTC), Polkadot (DOT), Shiba Inu (SHIB), Stellar (XLM), Tezos (XTZ), and Chainlink (LINK). That is 16 named assets confirmed as digital commodities, meaning they are not securities and not subject to SEC registration requirements.

2. Digital Collectibles This covers non-fungible tokens (NFTs) and memecoins. A memecoin is a crypto token that derives most of its value from community sentiment and internet culture rather than any underlying technology or utility. Their classification as collectibles rather than securities has long been debated.

3. Digital Tools This category includes utility tokens and assets like ENS (Ethereum Name Service) domains, which function more like software tools or naming services than investment products.

4. Payment Stablecoins Compliant stablecoins that meet the requirements of the GENIUS Act fall into this group. These are tokens pegged to a stable asset, typically the U.S. dollar, and used primarily for payments rather than speculation.

Only one category remains under securities law: tokenized traditional securities, meaning tokens that represent conventional financial instruments like stocks or bonds.

How Does This Affect Staking, Mining, and Airdrops?

Crypto activities like staking, mining, airdrops, and token wrapping have long existed in a regulatory gray area. The new interpretation attempts to address each of them, though not with a one-size-fits-all approach.

Staking and Mining

Protocol staking (locking up tokens to help validate a blockchain network) and protocol mining (using computing power to verify transactions and earn new tokens) are both addressed in the guidance. The key factor is whether the activity involves an investment contract. If a user stakes tokens independently through their own wallet, that is treated differently from participating in a staking pool managed by a third party that promises returns.

Airdrops

An airdrop is when a project distributes tokens directly to wallet addresses, often for free. The guidance clarifies that the securities law treatment of an airdrop depends on the nature of the token being distributed and how the distribution is structured.

Token Wrapping

Wrapping a token means converting it into a version compatible with another blockchain. For example, Wrapped Bitcoin (WBTC) is an ERC-20 token on Ethereum that represents Bitcoin. The interpretation clarifies that wrapping a non-security crypto asset does not automatically turn it into a security.

Is This the End of Crypto Regulatory Uncertainty in the U.S.?

Not entirely. The interpretation is a significant step forward, but it does not resolve every open question in U.S. crypto regulation.

The SEC is still working on separate rulemaking related to crypto asset offerings, which could further define how tokens are issued and traded. Congress is also still debating broader market structure legislation that would more formally divide authority between the SEC and CFTC.

What the guidance does is establish a working framework that both agencies agree to apply consistently. It also acknowledges what SEC Chair Atkins called a reality the previous administration “refused to recognize”: that most crypto assets are not themselves securities. Atkins even noted, half-jokingly, that the SEC is “no longer the Securities and Everything-Under-the-Sun Committee.”

What the Coinbase Case Shows Us About Why This Matters

The history of Coinbase and the SEC illustrates just how damaging the previous lack of clarity was. In 2022, Coinbase filed a formal Rulemaking Petition with the SEC, asking for clear rules. After nine months of silence, the exchange filed a writ of mandamus in April 2023, essentially asking the agency for a simple yes or no answer.

The SEC denied the petition in December 2023. Former Chairman Gary Gensler maintained that existing laws already covered crypto and that the agency had the discretion to set its own priorities.

Coinbase Chief Legal Officer Paul Grewal responded to the new joint guidance on X, writing: “2023 me couldn’t have imagined that 2126 me would see such a thing, let alone 2026 me. The healing continues.”

How Does an Investment Contract Work in Crypto?

An investment contract is defined under the Howey Test, a legal standard from a 1946 U.S. Supreme Court case. A transaction is an investment contract if it involves an investment of money in a common enterprise with an expectation of profits from the efforts of others.

The SEC has historically used this test to argue that many token sales qualify as securities offerings. What the new interpretation adds is the idea that this classification can change over time. A token might be sold initially as part of a securities offering (think an ICO or token presale), but as the underlying network becomes more decentralized and the token’s value no longer depends on a central team’s efforts, it can transition out of that classification.

This concept of a dynamic investment contract status is new in formal regulatory guidance and has significant implications for token issuers and early investors.

Conclusion

The joint SEC-CFTC interpretation establishes a five-category token taxonomy, names 16 crypto assets as digital commodities, and clarifies the regulatory treatment of staking, mining, airdrops, and wrapping. It does not resolve every outstanding question in U.S. crypto law, but it gives market participants a defined framework to work within as Congress continues to develop broader legislation.

Resources

Press release by US SEC: SEC Clarifies the Application of Federal Securities Laws to Crypto Assets

Press release by CFTC: CFTC Joins SEC to Clarify the Application of Federal Securities Laws to Crypto Assets

2022 Petition by Coinbase: Petition for Rulemaking – Digital Asset Securities Regulation

Report by Reuters 1: US SEC says no to new crypto rules; Coinbase asks court to review

Report by Reuters 2: Updated: Coinbase Files Mandamus Action to Compel SEC to Write Crypto Regulations