On 17 March 2026, the United States Securities and Exchange Commission issued an interpretation of the definition of “security” as applied to certain crypto assets and transactions involving them, with the Commodity Futures Trading Commission joining to provide concurrent guidance under the United States Commodity Exchange Act. The interpretation was issued as Release Nos. 33-11412 and 34-105020 (File No. S7-2026-09) and published at 91 Fed. Reg. 13714, with an effective date of 23 March 2026. It does not supersede or replace the Howey test, which the Commission expressly acknowledges remains binding legal precedent. It conveys the Commission’s own view of how that precedent applies to digital assets. For an industry that spent more than a decade reading agency intent from enforcement actions, the document is the first authoritative map of where the securities perimeter falls.
The US SEC & US CFTC interpretation
The status of the document is the first thing that distinguishes it. The Commission is candid about the period that preceded it. The interpretation records that, before 2025, the Commission “failed to develop a tailored regulatory framework that accommodates crypto asset innovation and entrepreneurship and instead focused its resources on bringing enforcement actions, thereby ‘regulating by enforcement.'” The release situates itself as the corrective: a position taken by the Commission itself, which expressly supersedes the staff’s 2019 Framework for “Investment Contract” Analysis of Digital Assets and states that the Commission and its staff “will administer the Federal securities laws consistent with the interpretation, including with respect to enforcement actions.”
That the CFTC joined matters for the jurisdictional question that has long unsettled the market. The CFTC’s guidance confirms it will administer the Commodity Exchange Act consistently with the interpretation, and that certain non-security crypto assets could meet the definition of “commodity” under that Act. The two agencies thus present a single, coordinated analytical approach, the first substantive product of the joint Project Crypto initiative they announced on 29 January 2026.
The five-category taxonomy
The interpretation classifies crypto assets into five categories by reference to their characteristics, uses and functions, and analyses each against the statutory definition of “security.” It defines a crypto asset as “any digital representation of value that is recorded on a cryptographically secured distributed ledger,” a definition it notes is identical to that of “digital asset” in the GENIUS Act.
What the Five Category Taxonomy Captures
The Commission has classified crypto assets into specific categories based on their characteristics, uses, and functions.
- Digital Commodities: These are assets linked intrinsically to the programmatic operation of a functional system, deriving value from supply and demand dynamics rather than the managerial efforts of others.
- Digital Collectibles: These assets are designed to be collected or used, conveying rights to artwork, music, videos, trading cards, game items, or representations of internet memes and events.
- Digital Tools: These assets perform practical functions, including acting as memberships, tickets, credentials, title instruments, or identity badges.
- Stablecoins: These are defined pursuant to the GENIUS Act as payment stablecoins issued by a permitted payment stablecoin issuer.
- Digital Securities: These are traditional financial instruments formatted as or represented by a crypto asset, where ownership records are maintained on a network.
Three of the five categories are, in themselves, not securities. Digital commodities are assets intrinsically linked to and deriving value from the programmatic operation of a functional crypto system, rather than from the expectation of profits from the essential managerial efforts of others; the release names Bitcoin, Ether, Solana, Cardano, XRP and Litecoin, among others, as examples. Digital collectibles are assets designed to be collected or used, such as those conveying rights to artwork or in-game items, with meme coins addressed as a sub-type whose value rests on supply and demand rather than managerial effort. Digital tools are assets performing a practical function, such as a membership, credential or identity badge.
The remaining two categories turn on statute and substance. Stablecoins are treated by reference to the GENIUS Act: a "payment stablecoin issued by a permitted payment stablecoin issuer" is excluded from the definition of "security" by operation of that Act, while stablecoins outside that definition may or may not be securities depending on their facts. Digital securities, or tokenised securities, are financial instruments within the definition of "security" that are formatted as or represented by a crypto asset. On this last point the interpretation is unambiguous: "A security is a security regardless of whether it is issued, or otherwise represented, offchain or onchain."
The separation doctrine: the genuinely new analysis
The taxonomy has drawn the attention, but the more consequential analysis sits in Part IV, where the Commission addresses how a non-security crypto asset may become subject to an investment contract and, critically, how it may cease to be. This is the part of the release that repays close reading.
The Commission's starting proposition is a distinction the market has often blurred. A non-security crypto asset may be offered and sold subject to an investment contract, and that investment contract is the security, but the asset itself is not thereby transformed. In the release's words, "the fact that a non-security crypto asset is subject to an investment contract does not transform the non-security crypto asset itself into a security." The security is the arrangement, not the token.
From this follows the analysis Chairman Atkins captured in the accompanying statement when he observed that the interpretation "reflects the reality that investment contracts can come to an end." The Commission identifies two routes to separation. The first is fulfilment: once an issuer has performed the essential managerial efforts it represented or promised, purchasers can no longer reasonably expect profit from those efforts, and the asset separates from the investment contract. The second is failure: where a sufficient period has passed without the promised efforts, or where the issuer publicly and unambiguously abandons them, the same separation occurs. The release is careful to preserve liability notwithstanding separation; an issuer that failed to register, or that made material misstatements, remains exposed under the federal securities laws even after the investment contract has ceased to exist.
For secondary markets, the interpretation supplies the test that has been missing. A non-security crypto asset continues to carry the associated investment contract into secondary transactions only where purchasers "would reasonably expect such representations or promises to remain connected" to it. Where that expectation has fallen away, secondary sales are not securities transactions. The analysis thus ties regulatory status to the reasonable expectations of purchasers at the time of the transaction, rather than fixing it permanently at issuance.
Mining, staking, wrapping and airdrops
The interpretation extends to four activities that have generated persistent uncertainty. Protocol mining on proof-of-work networks and protocol staking on proof-of-stake networks, in the forms the release describes, do not involve the offer and sale of a security; the Commission characterises the participants' conduct as administrative or ministerial rather than the managerial effort of others, and addresses self-staking, custodial staking, and liquid staking, including the status of staking receipt tokens. The wrapping of a non-security crypto asset, producing a redeemable wrapped token on a one-for-one basis, is likewise treated as outside the securities perimeter where it functions as a receipt. And certain airdrops, those where recipients provide no money, goods, services or other consideration, fail the first element of the Howey test, an investment of money, and so do not give rise to an investment contract.
What the interpretation invites participants to weigh
The interpretation is, by its own description, the Commission's "first step" and is open for public comment under File No. S7-2026-09, with the Commission stating it may "refine, revise, or expand upon the interpretation." Its provisional character is itself a planning consideration. Participants whose structures turn on the precise contours of the separation analysis may find value in engaging during the comment period rather than treating the present text as settled.
A second consideration follows from the separation doctrine. Because an asset's status can shift as an issuer's representations are fulfilled, fail or are abandoned, an analysis performed at launch may not hold over time; periodic reassessment, rather than reliance on an initial determination, is the more cautious footing, particularly for those operating secondary-market venues where the reasonable-expectation test governs whether a given listing trades as a security. Issuers making representations about future managerial efforts may also note the Commission's express encouragement to state those efforts clearly, with milestones, timelines and resourcing, and to disclose their completion, since it is the presence and later discharge of such representations that creates and then ends the investment contract.
Finally, the interpretation expressly leaves untouched several adjacent regimes. It states that no interference is intended with the federal tax laws, the Bank Secrecy Act or the Anti-Money Laundering Act, and that it does not alter the respective statutory authorities of the SEC and CFTC. Those operating across these regimes will note that clarity on securities status does not resolve obligations arising elsewhere.
Conclusion
The interpretation is the most authoritative federal statement to date on the classification of crypto assets, issued by the Commission itself rather than its staff and carrying the CFTC's concurrence on the commodity question. Its lasting contribution may prove to be less the taxonomy, which largely codifies positions the market had anticipated, than the separation doctrine, which for the first time gives issuers and trading venues a Commission-level framework for determining when a token sold under an investment contract ceases to carry it. The framework is interpretive, remains open to comment, and is described by the Commission as a bridge while Congress works on market-structure legislation; its durability will ultimately depend on how far any such legislation adopts the same lines.
(Source: https://www.sec.gov/files/33-11412-fact-sheet.pdf, https://www.sec.gov/rules-regulations/2026/03/s7-2026-09, https://www.sec.gov/newsroom/press-releases/2026-30-sec-clarifies-application-federal-securities-laws-crypto-assets)
