SEC Clarifies Most Crypto Assets Are Not Securities Under Federal Law

SEC Says Most Crypto Assets Are Not Securities – New Interpretation Clarifies Federal Oversight Boundaries

Key Takeaways

• The US Securities and Exchange Commission states that most crypto assets are not securities under federal law.
• The agency introduced an interpretative notice outlining a token taxonomy and clarifying how non security crypto assets are treated.
• Only tokenized traditional securities remain subject to securities laws under the new interpretation.
• The notice follows a memorandum of understanding between the SEC and the Commodity Futures Trading Commission.
• The announcement comes amid leadership changes in the SEC enforcement division.

SEC Issues Interpretation on Non Security Crypto Assets

The US Securities and Exchange Commission has published an interpretative notice stating that most crypto assets are not considered securities under federal law. The agency described the move as an effort to clarify how so called non security crypto assets should be treated within existing securities regulations.

According to the SEC, the interpretation is intended to serve as an important bridge while lawmakers in Congress work on digital asset market structure legislation. That legislation is expected to codify how financial regulators oversee crypto markets and define the division of responsibilities between agencies.

SEC Chair Paul Atkins said the guidance aims to draw clear regulatory lines and recognizes that most crypto assets are not themselves securities. He also stated that the interpretation reflects the view that investment contracts can come to an end, indicating that a digital asset may not permanently fall under securities laws depending on its structure and use.

Token Taxonomy and Regulatory Scope

A central element of the notice is the introduction of what the SEC calls a coherent token taxonomy. The framework categorizes digital assets into several groups, including digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.

The SEC also addressed how a non security crypto asset may or may not be considered an investment contract under its jurisdiction. In addition, the interpretation clarifies how federal securities laws apply to activities such as airdrops, protocol mining, protocol staking, and the wrapping of a non security crypto asset.

Under the new interpretation, only one crypto asset class remains subject to securities laws: traditional securities that are tokenized. This means that if an existing security is represented in tokenized form, it continues to fall under the SEC’s authority. Other categories of crypto assets would generally not be treated as securities themselves, based on the agency’s current view.

The commission encouraged market participants to review the interpretation to better understand the regulatory jurisdiction between the SEC and the Commodity Futures Trading Commission when it comes to cryptocurrencies.

Coordination With the CFTC and Pending Legislation

The interpretative notice follows the signing of a memorandum of understanding between the SEC and the CFTC. The agreement is designed to improve coordination between the two regulators in overseeing crypto and other markets.

At the same time, lawmakers in the US Senate continue to negotiate the terms of a digital asset market structure bill. The legislation is expected to grant the CFTC more authority in overseeing cryptocurrencies. The SEC’s latest interpretation is positioned as a contribution to that legislative process, offering clarity while Congress debates how oversight responsibilities should be formally allocated.

The composition of the SEC’s leadership also reflects the current political landscape. Chair Paul Atkins and Commissioners Mark Uyeda and Hester Peirce, all Republicans, are currently the only sitting members of a panel that is intended to have five bipartisan commissioners. As of the announcement, there were no public plans to nominate additional commissioners to the SEC or to the CFTC, which has only one Senate confirmed member.

Enforcement Division Leadership Change

The announcement on crypto asset classification came shortly after a change in the SEC’s enforcement leadership. Margaret Ryan, director of the enforcement division, resigned from the agency. Sam Waldon, previously principal deputy director, was named acting enforcement director.

The leadership change drew criticism from former SEC official John Reed Stark, who previously founded and led the SEC’s Office of Internet Enforcement. Stark questioned the agency’s claims that the enforcement division had prioritized investor protection and accountability for individual wrongdoers. He stated that the SEC had shifted away from its traditional role as a law enforcement body.

While these comments reflect external criticism, the SEC’s formal communication focused on the interpretative guidance and its implications for digital asset classification.

Implications for Crypto Market Participants

For crypto market participants, including platforms, token issuers, and service providers, the SEC’s interpretation provides additional clarity on how the agency views different categories of digital assets. By stating that most crypto assets are not securities and by limiting securities treatment primarily to tokenized traditional securities, the SEC outlines a narrower scope of direct securities oversight for many types of tokens.

The clarification on airdrops, staking, mining, and token wrapping is also relevant for businesses that facilitate or rely on these mechanisms. The guidance does not replace legislation but signals how the SEC intends to interpret existing federal securities laws in the current environment.

The notice is explicitly framed as an interim step while Congress considers broader market structure reforms. As such, the regulatory landscape for crypto assets in the United States remains connected to ongoing legislative negotiations and interagency coordination.

Our Assessment

The SEC’s interpretative notice formally states that most crypto assets are not securities under federal law and introduces a structured taxonomy for digital assets. It limits securities treatment primarily to tokenized traditional securities and clarifies how certain crypto related activities are viewed under existing law. The guidance comes amid coordination with the CFTC, pending market structure legislation in Congress, and changes in the SEC’s enforcement leadership, all of which shape the current regulatory environment for digital assets in the United States.