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The US Securities and Exchange Commission has drawn a bright line around crypto assets, declaring most tokens outside securities laws. The move creates a path for assets to flee SEC oversight and potentially to be overseen by the country's commodities regulator.
The sweeping reinterpretation of how federal securities laws apply to crypto assets was announced on 17 Mar at the DC Blockchain Summit by Chairman Paul Atkins. Speaking at the event, Atkins introduced a "token taxonomy" that places digital assets into distinct categories, concluding that digital commodities, collectibles, tools and certain payment stablecoins do not fall under the SEC's jurisdiction.
Under the new guidance, only a narrow category of tokenized versions of traditional financial instruments, labeled "digital securities," would remain subject to securities laws. Tokens falling outside the SEC's purview would likely be defined as commodities under the Commodity Exchange Act and therefore administered by the Commodity Futures Trading Commission (CFTC), according to an SEC guidance document.
"We're not the securities and everything commission anymore," Atkins said during a speech at the event.
SEC redraws crypto boundaries
The SEC classified a broad set of major tokens as "digital commodities," placing much of the crypto market falls beyond the SEC's jurisdiction and closer to a commodities-based framework.
That category includes assets such as Aptos (APT), Avalanche (AVAX), Bitcoin (BTC), Bitcoin Cash (BCH), Cardano (ADA), Chainlink (LINK), Dogecoin (DOGE), Ether (ETH), Hedera (HBAR), Litecoin (LTC), Polkadot (DOT), Shiba Inu (SHIB), Solana (SOL), Stellar (XLM), Tezos (XTZ) and XRP.
A path out of securities status
The SEC also clarified that a crypto asset may transition out of securities regulation over time.
According to the agency, a token sold as part of an investment contract can later fall outside securities laws once reliance on a central team fades. It also set a higher bar for applying the Howey test by requiring clear, explicit promises. The concept has been a central point of contention between regulators and crypto firms, and by formally recognizing that investment contracts can end, the SEC is introducing a legal pathway for assets to move outside its remit.
"The interpretation in this release does not supersede or replace the Howey test, which is binding legal precedent," it rather reflects the Commission's views "regarding how certain aspects of the Howey test apply to crypto assets and transactions involving crypto assets," the SEC said in the guidance document.
Clarity for staking, airdrops
The long-awaited guidance also addresses several common crypto mechanisms that have previously drawn regulatory scrutiny, including airdrops, staking, mining rewards and token wrapping.
While the SEC clarified that these activities do not automatically constitute securities transactions, depending on how they are structured. The agency said market participants should focus on whether specific representations or promises create an expectation of profit based on the efforts of others.
"Only Congress can ensure that regulation in this area is future-proofed through comprehensive market structure legislation," Atkins said, pointing to lawmakers as key to delivering a long-term framework.