SEC Says Most Cryptocurrencies Aren’t Securities in Major Regulatory Shift

• The SEC and CFTC issued joint interpretive guidance on March 17 introducing a five-category token taxonomy: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.
• The guidance explicitly classifies protocol mining, staking, and certain airdrops as non-securities activities.
• SEC Chairman Paul Atkins stated the interpretation “recognizes what the former administration refused to recognize”.

US regulators made their clearest move yet toward a new crypto framework on March 17, as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) said most digital assets should not be treated as securities and introduced a formal classification system to replace years of case-by-case enforcement.

The joint guidance follows a memorandum signed by the two agencies on March 11 and divides crypto assets into five groups.

First, digital commodities, digital collectibles, digital tools, stablecoins issued under the GENIUS Act, and second, digital securities that meet the Howey test for investment contracts. 

Tokens named as digital commodities include Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and XRP.

Read more: Bank of England Signals Flexibility on Stablecoin Caps After Industry Pushback

The agencies also addressed several activities that had long operated without clear federal guidance. They said protocol mining, including Bitcoin mining, is not an offer or sale of securities. 

Staking was also defined as a non-securities activity, with regulators describing validator work as administrative and stating that rewards are payments for services rather than profits generated by others. 

Certain airdrops were found not to meet the Howey test when recipients give no consideration, and wrapping a non-security token was said not to change its legal status.

End of Regulation by Enforcement

The staking decision marks a break from the previous administration’s approach. The SEC sued Kraken in 2023 over its staking program and had argued that many crypto assets could fall under securities law. 

Since then, the agency has dropped most non-fraud enforcement cases tied to unregistered activity.

The guidance also formalises Bitcoin and Ethereum as digital commodities under CFTC oversight, ending years of uncertainty around ETH in particular. 

Stablecoins issued outside the GENIUS Act framework were left open to case-by-case review, preserving some regulatory discretion. With former SEC commissioner Caroline Crenshaw no longer on the panel, no dissent was recorded.

Related: Vitalik Buterin Proposes Simplifying Ethereum Nodes to Boost Decentralisation

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