Key Points

• SEC and CFTC guidance sets a five-category system for classifying crypto assets under federal securities laws.
• Bitcoin, Ether, Solana, Cardano, XRP and other major crypto assets classified as digital commodities, not securities.
• Non-security crypto assets can become securities if marketed with promises of profit from issuer's managerial efforts.
• Guidance provides compliance framework for crypto businesses, exchanges, platforms and service providers.

Comprehensive Guidance

After more than a decade of regulatory ambiguity, the Securities and Exchange Commission has finally published comprehensive guidance clarifying how federal securities laws apply to crypto assets.

Released on March 17, 2026, the SEC's interpretation — joined by the Commodity Futures Trading Commission — represents the most significant regulatory clarity the crypto industry has received to date.

For businesses operating in or adjacent to the digital asset space, this guidance fundamentally changes the regulatory landscape. The "regulation by enforcement" era appears to be over, replaced with clear taxonomies and defined pathways for compliance.

The New Crypto Asset Taxonomy

The heart of the SEC's interpretation is a five-category classification system for crypto assets. Understanding where your assets fall within this framework is essential for determining your regulatory obligations.

1. Digital Commodities: Not Securities
Digital commodities are crypto assets intrinsically linked to the programmatic operation of a functional crypto system, deriving their value from that operation and supply-and-demand dynamics rather than from expectations of profit based on the managerial efforts of others.

The SEC specifically identified the following major crypto assets as digital commodities: Bitcoin, Ether, Solana, Cardano, XRP, Dogecoin, Avalanche, Polkadot, Chainlink, Litecoin, Hedera, Shiba Inu, Stellar, Tezos, Aptos, and Bitcoin Cash. Notably, the Commission also clarified that Algorand (ALGO) and LBRY Credits (LBC) qualify as digital commodities, even though they do not underlie futures contracts on designated contract markets.

2. Digital Collectibles: Not Securities
Digital collectibles — including NFTs and meme coins — are crypto assets designed to be collected or used, representing artwork, music, videos, trading cards, in-game items, or digital representations of cultural content. These assets derive their value from artistic, entertainment, social, or cultural significance rather than essential managerial efforts.

The guidance specifically notes that meme coins typically are acquired for artistic, entertainment, social, and cultural purposes, with their value driven by supply and demand. Examples of digital collectibles include CryptoPunks, Chromie Squiggles, Fan Tokens, WIF, and VCOIN. One important caveat: fractionalized digital collectibles — which enable individuals to acquire fractional ownership interests in a single collectible — may constitute securities because they may involve essential managerial efforts from which purchasers would reasonably expect to derive profits.

3. Digital Tools: Not Securities
Digital tools are crypto assets that perform practical functions such as memberships, tickets, credentials, title instruments, or identity badges. Their value derives from functional utility, and they often are non-transferable or "soul-bound." Examples include Ethereum Name Service domain names and CoinDesk's "Microcosms" NFT Consensus Ticket.

4. Stablecoins: Depends on Structure
The GENIUS Act, enacted in July 2025, categorically excludes "payment stablecoins issued by permitted payment stablecoin issuers" from the definition of "security." These issuers are prohibited from paying any form of interest or yield to stablecoin holders solely for holding, using, or retaining the payment stablecoin. Stablecoins other than payment stablecoins issued by permitted issuers may meet the definition of "security" depending on the facts and circumstances.

5. Digital Securities: Securities
Digital securities, commonly known as "tokenized securities," are financial instruments enumerated in the definition of "security" that are formatted as or represented by crypto assets, where ownership records are maintained on one or more crypto networks. These remain fully subject to federal securities laws regardless of their blockchain format.

When Non-Security Crypto Assets Become Subject to Securities Laws

Even crypto assets that are not themselves securities can become subject to investment contracts, and therefore to securities regulation, based on how they are marketed and sold.

A non-security crypto asset becomes subject to an investment contract when an issuer offers it by inducing an investment of money in a common enterprise with representations or promises to undertake essential managerial efforts from which a purchaser would reasonably expect to derive profits.

What Creates an Investment Contract

The SEC provided detailed guidance on the types of representations and promises that can create investment contracts:

• Representations must come from the issuer (or its affiliates and agents) and be conveyed to purchasers before or contemporaneously with the sale.
• Reasonable channels include written or oral agreements, public communications through established patterns (websites, official social media), direct private communications, regulatory filings, or documents clearly attributable to the issuer (such as whitepapers).
• Representations are more likely to create investment contracts when they are explicit and unambiguous, contain sufficient detail demonstrating the issuer's ability to implement the project, and explain how the issuer's efforts will produce profits.
• In contrast, vague representations or those lacking milestones, funding, or resource plans likely would not create reasonable expectations of profit.

When Investment Contracts End

Significantly, the SEC confirmed that investment contracts can terminate, meaning a crypto asset that was once subject to securities laws may no longer be.

This occurs when:

Fulfillment: The issuer has fulfilled its representations or promises to engage in essential managerial efforts, even if it continues providing non-essential efforts with respect to the crypto asset or associated system.

Failure or Abandonment: A sufficiently long period of time has passed without the issuer conducting promised efforts, or the issuer publicly announces it will no longer perform the promised efforts (effectively abandoning the project).

However, the SEC emphasized that issuers remain liable for any violations during the existence of the investment contract, including registration failures and material misstatements or omissions.

Protocol Mining and Staking: Not Securities Transactions

In welcome news for network participants, the SEC clarified that protocol mining and protocol staking activities do not involve the offer and sale of securities.

Mining Activities

Both solo mining and mining pool participation are considered administrative or ministerial activities rather than investments in common enterprises. Miners contribute their own computational resources and earn rewards from the network protocol itself — not profits derived from the essential managerial efforts of others.

Even pool operators' activities in coordinating miners and distributing rewards are administrative or ministerial in nature.

Staking Activities

Similarly, all forms of protocol staking — solo staking, self-custodial staking with third parties, custodial arrangements and liquid staking — do not involve securities transactions when conducted as described in the guidance.

Staking Receipt Tokens (commonly called "liquid staking tokens") issued as receipts for non-security crypto assets are not securities, provided they simply evidence ownership of the deposited digital commodities and accrued rewards.

Ancillary services such as slashing coverage, early unbonding, alternate reward payment schedules, and aggregation of digital commodities for staking minimums are administrative or ministerial in nature and do not change this analysis.

Wrapping: Not a Securities Transaction

The "wrapping" of non-security crypto assets—depositing a crypto asset with a custodian or cross-chain bridge and receiving equivalent "Redeemable Wrapped Tokens" on a one-for-one basis—does not involve the offer or sale of securities.

Wrapped tokens are receipts evidencing ownership of deposited crypto assets, and the wrapping process itself is administrative or ministerial, typically used to facilitate interoperability between different crypto networks.

Airdrops: Generally Not Subject to Securities Laws

Certain airdrops of non-security crypto assets do not involve securities transactions because they fail the first element of the Howey test—there is no "investment of money."

This applies when recipients do not provide the issuer with money, goods, services, or other consideration in exchange for the airdropped crypto assets.

However, this interpretation does not apply to airdrops where recipients perform services (such as following social media accounts or writing articles) in exchange for the airdrop—those transactions fall outside this guidance.

Practical Implications for Businesses

For Crypto Asset Issuers
If you are launching or have launched a crypto asset, this guidance provides a roadmap for determining whether your asset is subject to securities laws. The classification depends not just on the technical characteristics of your asset, but critically on how you market and promote it. Issuers who make representations or promises about essential managerial efforts should clearly outline those efforts, provide timelines and milestones, explain needed resources, and publicly disclose when those efforts are complete.

For Exchanges and Trading Platforms
The taxonomy provides clearer lines for determining which assets can be listed without securities registration. Digital commodities, digital collectibles, and digital tools, as described by the SEC, are not themselves securities, though platforms should remain alert to whether specific assets may be subject to investment contracts based on issuer conduct.

For Staking and Mining Service Providers
The guidance confirms that providing staking and mining services, including through pools or custodial arrangements, does not constitute dealing in securities, provided the services conform to the descriptions in the guidance. Service providers should review their offerings against the SEC's detailed descriptions to ensure compliance.

For Investors and Businesses Holding Crypto
Understanding the regulatory status of your holdings can inform decisions about custody, trading, and tax treatment. The SEC's clarification that many major crypto assets — including Bitcoin, Ether, Solana, XRP and others — are digital commodities rather than securities provides important certainty.

Looking Ahead

This interpretation was characterized as a "first step," and the SEC has indicated it may refine, revise or expand the interpretation based on public comment.

The joint effort between the SEC and CFTC reflects a commitment to harmonized federal oversight as Congress continues work on comprehensive market structure legislation.

For more information on this topic, contact Stephen A. Aschettino at saschettino@foxrothschild.com.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the authors and not necessarily this law firm or its clients.