Written by: Marcus Wolter, Daniel O’Brien, and Crystel Saraie

The U.S. Securities and Exchange Commission (SEC), with the Commodity Futures Trading Commission (CFTC), has issued a long-awaited (non-binding) interpretation clarifying the application of federal securities laws to crypto assets and related transactions. This development represents a meaningful shift toward regulatory coherence in a space that has, for over a decade, been characterised by uncertainty and enforcement-driven guidance.

This development builds on the broader legislative momentum observed in 2025, where U.S. policymakers made meaningful progress toward a federal digital asset framework through initiatives such as the GENIUS Act and the proposed CLARITY Act, aimed at clarifying market structure and regulatory jurisdiction.

Key Clarifications and Criteria

At its core, the interpretation confirms an important principle: most crypto assets are not inherently securities. Rather, the analysis turns on whether a particular arrangement involving a crypto asset constitutes an “investment contract” under established legal principles. This distinction is not new, but the SEC’s articulation provides much-needed clarity on how that analysis should be applied in practice, particularly in the context of evolving token models and decentralised networks.

Importantly, the interpretation acknowledges that the status of a crypto asset is not static. A token that is initially offered as part of an investment contract may, over time, cease to be subject to an investment contract if the essential managerial efforts giving rise to purchasers’ reasonable expectation of profit have ended, been fulfilled, or no longer remain reasonably expected. This recognition reflects commercial reality and addresses a long-standing concern among market participants that regulatory classification could attach indefinitely, irrespective of the evolving nature of the underlying project.

The interpretation also introduces a more structured taxonomy of crypto assets, distinguishing between categories such as:

• Digital commodities
• Digital collectibles
• Digital tools
• Stablecoins
• Digital securities

While not determinative in itself, this framework provides a more coherent lens through which regulators and market participants can assess the nature and regulatory treatment of different token types. Crucially, the interpretive release does not limit itself to abstract categories: the SEC names sixteen specific tokens as digital commodities, including Aptos (APT), Avalanche (AVAX), Bitcoin (BTC), Bitcoin Cash (BCH), Cardano (ADA), Chainlink (LINK), Dogecoin (DOGE), Ether (ETH), Hedera (HBAR), Litecoin (LTC), Polkadot (DOT), Shiba Inu (SHIB), Solana (SOL), Stellar (XLM), Tezos (XTZ), and XRP. The SEC’s willingness to identify specific tokens as digital commodities and confirm that most crypto assets are not themselves securities provides a degree of individual certainty – for holders, issuers, and trading platforms – that has been absent from prior regulatory guidance.

In addition, the interpretation offers targeted guidance on a number of common crypto-native activities, including airdrops, protocol mining, staking, and token wrapping – areas that have historically lacked clear regulatory direction. On staking, the SEC confirms that protocol staking on proof-of-stake networks does not involve the offer or sale of a security, whether conducted on a solo, self-custodial, custodial, or liquid staking basis – a conclusion that extends to third-party node operators and staking service providers. Staking receipt tokens issued in liquid staking arrangements are addressed separately and confirmed likewise not to be securities. On wrapping, the SEC confirms that the wrapping of a non-security crypto asset – that is, the issuance of a redeemable wrapped token on a one-for-one basis without any yield or profit opportunity – does not constitute a securities transaction. On airdrops, the interpretation clarifies that where recipients provide no money, goods, services, or other consideration in exchange for the airdropped asset, the first element of the Howey test (an “investment of money”) is not satisfied, and the transaction falls entirely outside the securities framework. By addressing these practices directly, the Commission reduces interpretive ambiguity and enables market participants to structure activities with greater confidence.

What This Means

A notable aspect of this development is the alignment between the SEC and the CFTC. The CFTC has confirmed that it will administer the Commodity Exchange Act consistently with the SEC’s interpretation and has confirmed that non-security crypto assets may qualify as “commodities” under the Commodity Exchange Act. This coordinated approach between the two agencies is a welcome step that reduces the fragmentation and regulatory overlap that has been a persistent challenge for industry participants operating across both the securities and commodities frameworks.

From a broader policy perspective, the interpretation represents the Commission’s first step toward a clearer regulatory framework for crypto assets under the federal securities laws, and complements Congressional efforts to advance bipartisan market structure legislation. Nonetheless, it provides an immediate and practical benefit: clearer “rules of the road” for issuers, developers, investors, and intermediaries operating in the crypto ecosystem.

For the crypto community, this development should be viewed as a positive and constructive step. Greater regulatory clarity reduces legal risk, facilitates more efficient capital formation, and supports innovation by allowing projects to be designed with a clearer understanding of applicable legal constraints. While important questions remain and fact-specific analysis will continue to be required, the direction of travel is evident: toward a more predictable, transparent, and ultimately sustainable regulatory environment for digital assets in the United States. It should be noted, however, that the interpretation does not supersede or replace the Howey test, which remains the binding Supreme Court precedent – the release expressly acknowledges this. The Commission is actively soliciting public comment and has indicated that it may refine, revise, or expand upon the interpretation in light of feedback received. Market participants should seek specific legal advice before placing reliance on the interpretation in relation to any particular asset or transaction.

This publication is distributed with the understanding that the author, publisher, and distributor of this publication and/or any linked publication are not rendering legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, portions of this publication may constitute Attorney Advertising. The choice of a lawyer is an important decision and should not be based solely upon advertisements.

Sources

[1] U.S. Securities and Exchange Commission. (March 17 2026). SEC clarifies application of federal securities laws to crypto assets (Press Release No. 2026-30). https://www.sec.gov/newsroom/press-releases/2026-30-sec-clarifies-application-federal-securities-laws-crypto-assets

[2] U.S. Securities and Exchange Commission; Commodity Futures Trading Commission. (March 17 2026). Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets (Release Nos. 33-11412; 34-105020; File No. S7-2026-09). https://www.sec.gov/files/rules/interp/2026/33-11412.pdf

[3] U.S. Securities and Exchange Commission. (March 17 2026). Fact Sheet: Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets. https://www.sec.gov/files/33-11412-fact-sheet.pdf