SEC Issues Long-Awaited Crypto Guidance, Says Most Tokens Not Securities

U.S. financial regulators have issued an interpretation clarifying how federal securities laws apply to crypto assets, setting up a significant shift in policy and providing long-sought guidance to the digital asset industry.

The move, announced jointly by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission on March 17, introduces a formal framework for classifying different crypto tokens and lays out how they should be treated under existing laws.

Officials said the goal is to end years of confusion and give clearer rules to companies, investors, and developers.

“For far too long, American builders, innovators, and entrepreneurs have awaited clear guidance on the status of crypto assets under the federal securities and commodity laws,” Commodity Futures Trading Commission Chairman Michael Selig said in a statement. “With today’s interpretation, the wait is over.”

SEC Chairman Paul Atkins said the interpretation will give markets a "clear understanding" of how federal regulators treat crypto assets under federal securities laws.

“It also acknowledges what the former administration refused to recognize–that most crypto assets are not themselves securities," Atkins said in a statement. "And it reflects the reality that investment contracts can come to an end."

At the same time, because of the "constantly evolving nature" of crypto assets, including underlying technologies, regulators said there may be some with hybrid characteristics that do not fall within any of the five categories or that span multiple ones.

Under the new approach, most crypto assets are not considered securities because their value comes from how they are used or from supply and demand, not from a company's efforts or a central issuer managing them. Regulators said only digital securities—essentially traditional financial assets that have been turned into tokens—automatically fall under securities laws.

A crypto asset that is not itself a security can fall under securities laws if it is sold as part of an investment contract—meaning that buyers are led to expect profits based on the efforts of others. Still, an investment contract tied to a crypto asset does not necessarily last forever.

"When a purchaser of a non-security crypto asset that has been subject to an investment contract could no longer reasonably expect the issuer’s representations or promises to engage in essential managerial efforts to remain connected to the non-security crypto asset, the non-security crypto asset separates from such representations or promises, and thereafter the non-security crypto asset is not subject to the Federal securities laws," the guidelines state.

Better Markets, a nonprofit financial reform group, said the SEC’s approach fails to reflect how most people actually use crypto—as a speculative investment rather than a tool for payments or services.

“The SEC’s refusal to treat crypto assets as securities endangers investors everywhere,” Benjamin Schiffrin, the group’s director of securities policy, said in a statement. “Crypto, as it exists today, is a speculative investment."

The group also criticized regulators for issuing the interpretation before a full public rulemaking process, arguing that such a major policy shift should have been subject to broader input before being finalized.

"Shockingly, the SEC’s interpretation informs the public of its views on how the federal securities laws apply to crypto assets and then asks for the views of the public," Schiffrin said. "Of course, had the SEC proposed a rule along the lines of its interpretation and solicited comment before finalizing its proposal, the public might have informed the SEC that it considers crypto to be a speculative investment, and the SEC might have had to grapple with that reality.”

Regulators said the interpretation will be published in the Federal Register and opened for public comment, with the possibility of further revisions based on feedback.

The agencies said the proposed guidelines are based on "extensive feedback" already received through multiple roundtables, written input, and meetings.