SEC Declares Most Crypto Assets Are Not Securities, Clarifying Regulatory Landscape
By John Nada·Mar 17, 2026·7 min read
The SEC has clarified that most crypto assets are not securities, providing regulatory certainty that could spur innovation and investment in the crypto space.
The United States Securities and Exchange Commission (SEC) has issued broad guidance towards the cryptocurrency industry on Tuesday, with SEC Chair Paul Atkins declaring that "most crypto assets" would not be considered securities. This groundbreaking guidance is significant as it provides clear distinctions for which types of assets do not meet the definition for securities, as well as what qualifies an asset as an investment contract. Furthermore, the guidance notes that protocol mining (as seen in Bitcoin) and staking, along with crypto airdrops—or tokens sent to a protocol's users and contributors—do not fall under the definition of a security.
“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,” said Atkins in a statement. His remarks indicate a significant pivot in the SEC's approach to cryptocurrency regulation, acknowledging that many crypto assets should not be treated as securities, a stance that had been largely overlooked by the previous administration.
Atkins went on to emphasize that this updated perspective reflects the reality that investment contracts can come to an end. He stated, "It also acknowledges what the former administration refused to recognize—that most crypto assets are not themselves securities." This shift serves as an important bridge for entrepreneurs and investors, particularly as Congress works to advance bipartisan market structure legislation, which Atkins expressed eagerness to implement alongside Commodity Futures Trading Commission (CFTC) Chairman Selig in the near future.
In a statement released soon after the SEC’s announcement, the CFTC affirmed its commitment to administering the Commodity Exchange Act in line with the SEC’s interpretation. The CFTC’s endorsement of the SEC's guidance is a major step in the agencies’ efforts to provide greater clarity regarding the treatment of crypto assets. This alignment not only complements the ongoing Congressional endeavors to codify a comprehensive market structure framework into statute, but it also signals a collaborative approach between two key regulatory bodies in navigating the complex landscape of cryptocurrency.
Despite recent delays in the progress of lawmakers on the CLARITY Act, the SEC’s proactive approach demonstrates that the regulator is not waiting for legislative frameworks to be established before setting clearer rules for the industry. Under the SEC’s previous leadership, the agency primarily focused on classifying digital assets within the context of the Howey Test—a legal standard derived from a Supreme Court case used frequently in enforcement actions against many crypto-native firms. However, Atkins indicated that reliance on the Howey Test had led to a “persistent failure to provide clarity” on which cryptocurrencies should be regulated by different agencies. By establishing a clearer framework, the SEC aims to foster a more predictable environment for market participants.
The new taxonomy included in the SEC’s implementation categorizes digital assets into five distinct groups: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. According to the SEC, digital securities are the only type of digital asset that falls squarely within its regulatory remit. This classification includes tokenized securities, which are digital representations of traditional investments, including stocks and U.S. Treasuries.
In order to determine whether a digital asset qualifies as a digital commodity, both the SEC and CFTC plan to assess whether the asset derives its value from the programmatic operation of a “crypto system,” rather than from the expectation of profit stemming from the essential managerial efforts of others. Within the context of cryptocurrencies like Bitcoin and Ethereum, which are generally considered to be digital commodities, these assets play a foundational role in securing their respective networks across a decentralized group of market participants.
The SEC's guidance also clarifies that digital collectibles are linked to creative works, such as music and artwork, but can also represent in-game items or references to internet memes. This definition suggests that many non-fungible tokens (NFTs) and meme coins would likely fall under this category. On the other hand, digital tools are defined as assets that can function as a membership or event ticket, along with a virtual identity.
Moreover, the SEC's implementation states that “non-security crypto assets” may be classified as investment contracts under certain circumstances, depending on the representations made by the issuers. However, it is crucial to note that the existence of an investment contract does not automatically classify a digital asset as a security during transactions on secondary markets, such as exchanges. This distinction further underscores the nuanced approach the SEC is taking to differentiate between various types of digital assets.
Atkins also previewed a potential safe harbor exemption for certain crypto projects, a concept that the SEC has hinted at for several months. He explained that such exemptions could soon apply to startups worth up to $5 million that are seeking to experiment with crypto assets within their first four years. Additionally, entrepreneurs raising up to $75 million via investment contracts involving certain crypto assets may also be eligible for these exemptions. These provisions could significantly reduce the regulatory burden for emerging projects, facilitating innovation and growth within the cryptocurrency ecosystem.
Atkins mentioned that the SEC expects to release proposed rules for public comment regarding these safe harbor exemptions in the “coming weeks.” The anticipation surrounding these developments highlights the industry’s eagerness for regulatory clarity, which is seen as a vital component for fostering a healthy environment for innovation in the crypto space.
In this context, clarity from regulatory agencies is crucial. It provides the stability that investors and entrepreneurs need to navigate the complex landscape of crypto assets. The SEC's proactive stance in addressing regulatory uncertainty signals a commitment to balancing innovation with investor protection. By establishing a clearer set of criteria, the SEC aims to foster a more predictable environment for market participants, alleviating the fears that have historically clouded the cryptocurrency market.
As the cryptocurrency market continues to evolve, the implications of this guidance will likely resonate across the industry. Investors and companies can now approach the market with greater confidence, knowing that a clearer regulatory framework is being established. This clarity not only reassures current participants but also has the potential to attract new entrants into the market, facilitating further growth.
Moreover, the SEC's actions may influence how other countries shape their own regulations regarding crypto assets, potentially leading to a more harmonized global approach. As nations grapple with the challenges posed by the rapid rise of digital currencies, the SEC's guidance could serve as a model for regulatory frameworks worldwide. By providing clear guidelines, the SEC has positioned itself as a facilitator of innovation, rather than a barrier.
The transformation in regulatory stance could catalyze significant growth in the cryptocurrency space. As the industry continues to mature, it is essential for regulatory bodies to adapt to the evolving landscape and support the development of new technologies and business models. The SEC's recent guidance represents a pivotal moment in the regulatory landscape, signaling a shift towards a more inclusive framework that recognizes the unique characteristics of various crypto assets.
Ultimately, the future of crypto assets may hinge on how effectively these regulations are implemented and how the market adapts to this new framework. As stakeholders in the cryptocurrency ecosystem begin to navigate this new landscape, the SEC's guidance will likely play a critical role in shaping the future trajectory of the industry. The collaborative efforts between the SEC and CFTC, along with the anticipated safe harbor exemptions, suggest an optimistic outlook for the future of cryptocurrency regulation and innovation. The SEC's initiative to provide clarity and certainty in the regulatory environment could empower entrepreneurs and investors alike, fostering a more vibrant and innovative cryptocurrency ecosystem.