SEC and CFTC Issue Landmark Joint Guidance on Classification of Crypto Assets Under Federal Securities Laws

On March 17, 2026, the Securities and Exchange Commission (“SEC” or “Commission”) and the Commodity Futures Trading Commission (“CFTC”) jointly released interpretive guidance (the “Release”) clarifying when transactions in crypto assets are subject to regulation under federal securities laws. The Release sets forth the Commission’s and the CFTC’s views on many topics relevant to market participants operating in the digital asset space. This Alert offers key takeaways for crypto asset market participants and summarizes the provisions of the Release.

Overview and Background

The Release follows the establishment of the SEC’s Crypto Task Force in January 2025 and the launch of “Project Crypto,” which became a joint SEC-CFTC initiative in January 2026 to harmonize federal oversight of crypto asset markets. The Release expressly supersedes prior staff statements, including the SEC’s 2019 Framework for “Investment Contract” Analysis of Digital Assets, and provides an authoritative Commission-level interpretation of how the SEC staff will apply the Howey test to crypto assets and related transactions.

The Release classifies crypto assets into five categories based on their characteristics, uses, and functions, discusses when transactions in crypto assets that are not themselves securities might still involve an “investment contract” that subjects the transaction to regulation under the federal securities laws, and goes on to evaluate the treatment of mining and staking, wrapping and airdrops under the federal securities law.

Key Takeaways for Market Participants

Although the Release has been presented as a “watershed moment” for the crypto industry, market participants should consider the following practical implications:

• No Formal Rulemaking. The Release is not a formal rulemaking. Unlike a rule adopted by the Commission following the statutorily mandated rulemaking process, the Release does not have the force of law. Although the Release undoubtedly provides valuable insight into the position of the Commission on the sale and use of digital assets, it may be updated, modified or abandoned in the future without formal rulemaking or the associated notice-and-comment process. In fact, the Commission has indicated that it may refine, revise, or expand upon this guidance based on feedback received in response to its request for public comment.
• Not Binding on Courts. The Release is not binding on courts, who will independently determine whether a particular crypto asset is a security and whether a sale or offering of a crypto asset is a securities offering. U.S. federal securities laws, as well as state securities laws, contain a variety of private rights of action. The disputes will be largely unaffected by the Release and sales of crypto assets deemed commodities by the Commission may not necessarily be interpreted the same way by courts or arbitrators.
• Subject to Market Infrastructure Legislation. Congress continues its work on legislation to establish a framework for the regulation of crypto assets, including establishing explicit grants of authority to the SEC, the CFTC and U.S. banking regulators. While there remain competing bills in the Senate and the House, we expect that legislation will reinforce and codify the interpretations and guidance provided by the SEC in the Release.
• Market Opportunity for Crypto Exchanges and Operating Companies. U.S. crypto exchanges and operating companies that are interested in maintaining crypto reserves may be the biggest beneficiaries of the Release. The Release indicates that secondary-market transactions generally will not be securities transactions where purchasers would not reasonably expect the issuer’s initial representations or promises to remain connected to the crypto asset (and, presumably, where the issuer has not made any further representations or promises that an investor would reasonably rely on in making an investment in the crypto asset). This should reduce the risk that trading in mature non-security crypto assets on an exchange will be characterized as involving securities transactions. In addition, crypto reserves can be maintained with a reduced risk of the operating company inadvertently becoming an “investment company” due to the company holding more than 40% of its total assets (excluding cash and government securities) in “investment securities.”
• Issuer Communication Considerations. Issuers planning token offerings should carefully consider whether their marketing materials and promotional activities could create reasonable expectations of profit from essential managerial efforts, triggering investment contract status. This will include statements made in the crypto asset’s white paper, on any promotional website, on public or private forums (e.g., Discord, Telegram, Reddit), at conferences or other events, and in interviews with the media.
• Failure to Address Identity of Issuers. The Release’s application of the Howey “investment contract” analysis depends in part on the actions or inaction of the relevant crypto asset’s “issuer.” Due to the nature of crypto assets, the identity of a crypto asset’s issuer is often unclear. The Commission’s failure to acknowledge that foundations, DAOs and other similar entities often provide a decentralized governance model for crypto assets projects leaves questions as to how developers or others may take steps to comply with the guidance, including communications that would seek to eliminate any residual representations or undertakings that could be seen as an investment contract, without inadvertently acknowledging that they are “issuers.” We expect that this aspect of the guidance will elicit comments and requests for clarification.
• Identification of Other Digital Commodities. The Commission explicitly identified a non-exhaustive list of crypto assets that are not digital commodities. However, the criteria used by the SEC to select the specific names noted in this non-exhaustive list is unclear and the relevance of omitted names is similarly unclear. For example, many crypto assets with relatively large market caps appear to have similar attributes to listed crypto assets but were not included in the list of digital commodities. We expect that this may be an area where comments seek additional clarity from the Commission in terms of determining what attributes were identified and relied upon in developing the list included in the Release.
• Potential for Onshore Offerings/Activities. One goal of the Release was likely to bring more crypto asset business back onshore. For instance, over the past five years, new crypto asset offerings have largely been restricted to non-U.S. persons and new crypto projects have often been launched using offshore foundations and DAOs. Whether the additional clarity provided by the Release will provide adequate comfort to resume initial coin offerings and other crypto asset activities in the United States remains to be seen.

Classification Framework: Five Categories of Crypto Assets

The SEC identifies four categories of crypto assets that are not securities: digital commodities, digital collectibles, digital tools and stablecoins. Each of those categories has certain features in common which are important to the SEC’s analysis. The Release states that digital commodities, digital collectibles and digital tools do “not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor.” With respect to stablecoins, pending effectiveness of the GENIUS Act, the SEC adopts the guidance previously published by its staff, which similarly only covered stablecoins that do not “pay or guarantee to pay interest or otherwise convey any rights to payments or assets except upon redemption for USD on a one-for-one basis.” In each case, the SEC’s analysis is also premised in large part on the assertion that the value of the asset depends on something other than the “essential managerial efforts” of others.

The fifth category of crypto assets identified in the Release are securities.

Digital Commodities

Digital commodities are crypto assets intrinsically linked to and deriving their value from the programmatic operation of a “functional” crypto system, as well as supply-and-demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others. The Commission explicitly identifies the following as digital commodities: Bitcoin (BTC), Ether (ETH), Solana (SOL), Cardano (ADA), XRP (XRP), Dogecoin (DOGE), Polkadot (DOT), Avalanche (AVAX), Chainlink (LINK), Litecoin (LTC), and several others. Digital commodities are not securities because they do not have the economic characteristics of a security, and their value is derived from the functional utility of the associated crypto system rather than the efforts of any central party.

The SEC noted that digital commodities can include governance tokens, allowing holders to vote on certain technical and governance matters, and include “gas” fees on transactions that are used to compensate validators, implying that neither feature would result in a digital commodity being treated as a security so long as there is no central party.

Digital Collectibles

Digital collectibles, including NFTs and meme coins, are crypto assets designed to be collected and may represent artwork, music, videos, trading cards, in-game items, or cultural references. Digital collectibles are not securities. These assets derive their value from artistic, entertainment, social, or cultural significance and supply-and-demand dynamics, not from any essential managerial efforts of their creators. The Commission identifies CryptoPunks, Chromie Squiggles, Fan Tokens, and VCOIN as examples of digital collectibles. Notably, fractionalized digital collectibles may constitute securities where purchasers reasonably expect profits from the essential managerial efforts of others.

The Commission’s inclusion of Dogecoin as a digital commodity suggests that a token may transition from one category to another over time. Under the outlined framework, Dogecoin would likely initially have been a digital collectible meme coin. Individual crypto assets may also be hybrids of more than one category or might not fit into any of the five identified categories.

Digital Tools

Digital tools are crypto assets that perform practical functions, such as memberships, tickets, credentials, title instruments, or identity badges. Digital tools are not securities. These assets derive their value from functional utility rather than any expectation of profits from managerial efforts of others. The SEC notes that the fact that a central party issues digital tools will not in and of itself result in the digital tool being treated as a security, stating that “[w]hile the value of a digital tool may be impacted directly or indirectly by the activities of the developer, the creator of a digital tool typically does not make representations or promises to undertake any essential managerial efforts from which a purchaser would reasonably expect to derive profits.” The SEC further notes that while digital tools are “often non-transferable,” the ability to resell a digital tool will not result in its being treated as a security, because such assets derive their value from functional utility rather than any expectation of profits from the essential managerial efforts of others. The Commission cites Ethereum Name Service domain names and CoinDesk’s Microcosms NFT Consensus Ticket as examples.

Stablecoins

The Commission confirms that “payment stablecoins” issued by "permitted payment stablecoin issuers" under the GENIUS Act will be categorically excluded from the definition of “security” after the effective date of that legislation. Corporation Finance has previously confirmed that prior to the GENIUS Act’s effective date, “Covered Stablecoins” (e.g., stablecoins that are fully backed by USD or low-risk assets and may be redeemed for their pegged value) are not securities under the Howey test. Stablecoins falling outside these categories may still constitute securities depending on the facts and circumstances.

Digital Securities

Digital securities, commonly known as “tokenized” securities, are financial instruments enumerated in the definition of “security” that are formatted as or represented by a crypto asset, with ownership maintained on one or more crypto networks. These are securities regardless of their format.

Non-Security Crypto Assets May Be Subject to Investment Contracts

The Commission clarified that a non-security crypto asset may be sold subject to an investment contract when the issuer promises to undertake essential managerial efforts from which a purchaser would reasonably expect to profit. Critically, the crypto asset itself does not become a security as a result; rather, it becomes subject to an investment contract, which is a security. Historically, there has been ambiguity around the existence and identity of the issuers of crypto assets. Despite the application of the Release depending on action or inaction of the issuer of a crypto asset, the Release does not clarify how to identify the issuer of a particular crypto asset.

However, non-security crypto assets do not necessarily remain subject to investment contracts in perpetuity. A crypto asset separates from an investment contract when purchasers can no longer reasonably expect the issuer’s representations or promises to engage in essential managerial efforts to remain connected to the asset. This separation may occur through either: (i) fulfillment of the issuer’s representations or promises regarding essential managerial efforts; or (ii) the issuer’s failure to perform, including abandonment of development. When, or if, these events have occurred will be a facts and circumstances determination and may depend on whether certain statements (e.g., posts on X, Discord or Telegram) are “public.” Issuers remain potentially liable under securities laws for failures to register offerings or for material misstatements that occurred while the crypto asset was subject to an investment contract, even after separation occurs.

Mining and Staking

The Commission confirmed that mining activities on proof-of-work networks do not involve the offer and sale of securities. This includes both solo mining and participation in mining pools, as these activities are administrative or ministerial in nature and do not involve reasonable expectations of profits from the essential managerial efforts of others.

Similarly, staking activities on proof-of-stake networks are not securities transactions. This interpretation covers self (or solo) staking, self-custodial staking with a third party, custodial arrangements, and liquid staking. Staking Receipt Tokens issued as receipts for non-security crypto assets that are not subject to investment contracts are also not securities. Ancillary services such as slashing coverage, early unbonding, and alternate rewards payment schedules do not change this analysis.

Wrapping

The Commission confirmed that “Redeemable Wrapped Tokens” do not involve securities transactions. In a general sense, “Redeemable Wrapped Tokens” are depository receipts. A user may deposit Bitcoin (or any other crypto asset) in a designated wallet in exchange for a new “wrapped BTC” token that is recorded and trades on a different (e.g., non-BTC) blockchain. The Commission characterizes the wrapping process as an administrative or ministerial function to facilitate interoperability between crypto networks, provided the wrapped token is backed and redeemable one-for-one and the deposited asset is effectively locked and not otherwise used. As such, no essential managerial efforts are involved, and the economic value of the wrapped token derives solely from the underlying deposited crypto asset. By contrast, a wrapped token representing a digital security, or a non-security crypto asset that remains subject to an investment contract, would remain a security.

Airdrops

The Commission provided guidance that airdrops of non-security crypto assets generally do not involve securities transactions because they fail the first prong of the Howey test, i.e., there is no “investment of money.” Airdrops where recipients perform services or provide other consideration in exchange for the tokens are not covered by this interpretation.

For More Information

Please contact any member of our Cryptocurrency & Blockchain practice if you have questions about how this guidance affects your business or would like assistance evaluating your activities under this new framework.