The SEC Releases New Interpretation on Crypto Assets
On March 17, 2026, the Securities and Exchange Commission (SEC) issued an Interpretative Release related to how federal securities laws will be applied to many cryptocurrency assets and related transactions. This release clarifies the SEC's approach in an area otherwise historically challenged with much uncertainty, especially with respect to the fundamental regulatory question of which crypto assets are considered securities and which aren't.
The Commodity Futures Trading Commission (CFTC) joined the interpretation, confirming the CFTC will administer the Commodity Exchange Act consistent with the SEC's interpretation. Some crypto assets that are not considered securities will instead meet the definition of "commodity" and thus be regulated by the CFTC.
This new guidance is part of a series of recent federal regulatory decisions, guidance, laws and orders, including Project Crypto launched by the SEC last year, which have provided substantially greater clarity in this growing sector of the economy.
Classification of Crypto Assets
In its interpretation, the SEC identified four types of crypto assets that are not considered securities under federal securities laws:
- Digital Commodities: crypto assets that are intrinsically linked to and derive their value from the programmatic operation of a functional crypto system.
- Digital Collectibles: crypto assets that are designed to be collected and/or used and may represent or convey rights to artwork, music, videos, trading cards, in-game items, or digital representations or references to internet memes, characters, current events, or trends.
- Digital Tools: crypto assets that perform a practical function, such as memberships, tickets, credentials, title instruments, or identity badges.
- Stablecoins: payment stablecoin issued by a permitted payment stablecoin issuer, as defined in the recent GENIUS Act.
This release also confirmed that digital securities (or "tokenized securities") are financial instruments that fall within the definition of "security" under federal securities laws. Digital securities are formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks.
Investment Contracts
In addition, the SEC explained that otherwise non-security crypto assets may be considered securities and thus subject to federal securities laws if offered and sold pursuant to an investment contract. This occurs, for example, when there is an investment of money in a common enterprise with a reasonable expectation of profits derived from the essential managerial or entrepreneurial efforts of others, based on the issuer's representations or promises. These tests flow from the long-standing "Howey test" articulated by the U.S. Supreme Court on the question of what is and what isn't a security, found in SEC v. W.J. Howey Co.
The analysis focuses on the nature of the issuer's representations or promises necessary to form an investment contract. Specifically, explicit and unambiguous (written or oral) representations demonstrating the issuer's ability to implement the proposed project and provide profits to the purchaser resulting from managerial efforts by the issuer are more likely to give rise to reasonable reliance. On the other hand, vague or generalized statements are unlikely to do so.
Furthermore, otherwise non-security crypto assets that are determined to be securities for a time for reasons described above can cease to be subject to federal securities laws if the relevant investment contract no longer exists or terminates. This happens when the issuer has either fulfilled its representations or promises or has failed to satisfy its representations or promises.
The release further explains that "protocol mining," "protocol staking," and the "wrapping" of an otherwise non-security crypto asset do not generally involve the offer and sale of a security, and that certain crypto asset disseminations known as "airdrops" do not involve an investment of money under Howey.
As an interpretation of the SEC's views, the release states that it takes effect immediately.
Applying Howey to evolving crypto assets and transactions can be challenging because of the novelty, variety and evolving nature of such products. The release provides additional significant clarity in the space.
For more information on the SEC's interpretative guidance on cryptocurrency asset classification and regulation, please contact Eric Mikkelson or the Stinson LLP contact with whom you regularly work.
