SEC Unveils Landmark Interpretive Guidance, Clarifying the Application of Federal Securities Laws to Crypto Assets

On March 17, 2026, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued a landmark joint interpretation of the definition of ‘security’, clarifying how US federal securities laws apply to crypto assets and transactions involving crypto assets, and signaling an end to more than a decade of regulation by enforcement. The Interpretation expressly supersedes the SEC staff’s April 2019 ‘Framework for “Investment Contract” Analysis of Digital Assets’, which had been the primary analytical tool market participants used for nearly seven years.

The Interpretation, which applies prospectively, accomplishes three things. First, it classifies crypto assets into five categories and provides a coherent token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins and digital securities. Second, it addresses how a non-security crypto asset may become subject to, and how it may cease to be subject to, an investment contract. Third, it clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking and the wrapping of a non-security crypto asset.

The Five-Category Taxonomy

The Interpretation establishes that digital commodities, digital collectibles and digital tools, as defined therein, are not themselves securities. Digital commodities are crypto assets intrinsically linked to and deriving value from a functional crypto system’s programmatic operation and supply-demand dynamics, not from the expectation of profits from others’ essential managerial efforts. They are integral to network operation, including consensus participation, fee payments and governance. The Commission provides illustrative examples of widely known assets it views as digital commodities including BTC, ETH, SOL, ADA, AVAX, DOT, XRP, LINK and others based on current characteristics, while making clear that designations may evolve.

Digital collectibles are crypto assets designed to be collected or used that may reference or convey rights to creative or cultural content or experiences, with value reflecting supply, demand, subject matter, popularity or scarcity rather than a purchaser’s reasonable expectation of profits from a creator’s essential managerial efforts. The Commission cautions that fractionalization or similar structures can involve investment contracts even when the underlying collectible is not a security. Digital tools are crypto assets that perform practical functions, such as memberships, tickets or identity credentials, and whose value derives from their functionality rather than passive yield or enterprise claims.

Stablecoins receive separate treatment. The GENIUS Act excludes from the securities definition any payment stablecoin issued by a permitted payment stablecoin issuer, subject to that statute’s definitions and effective-date mechanics. Pending the GENIUS Act’s effectiveness, the SEC interprets that offers and sales of ‘Covered Stablecoins’ do not involve securities. Other stablecoins may meet the securities definition depending on facts and circumstances. Digital securities—instruments enumerated in the securities definition that are formatted as or represented by crypto assets—remain securities irrespective of tokenization.

Attachment and Separation of Investment Contracts

The SEC centers its analysis on the issuer’s marketing and promotion when non-security crypto assets are offered. Explicit representations or promises to undertake essential managerial efforts that drive expected profits will create an investment contract when coupled with an investment of money in a common enterprise. Crucially, subjecting a non-security asset to an investment contract does not convert the asset itself into a security.

Separation occurs when purchasers can no longer reasonably expect the issuer’s represented essential managerial efforts to remain connected to the asset. Once the issuer has fulfilled those representations or promises, the associated investment contract ceases to exist, and subsequent offers or sales of the non-security asset are not securities transactions unless a new investment contract is created. The Commission encourages precise, time-bound disclosures of promised efforts and milestones, and public notice when promises are fulfilled, to clarify when separation is achieved. Importantly, failure to register an offering of an investment contract, or to qualify for an exemption, remains a violation with investor rights and anti-fraud exposure even if the asset later separates from the contract.

Protocol Mining, Staking and Wrapping

The Commission analyzes protocol mining on proof-of-work networks and protocol staking on proof-of-stake networks, concluding that these activities, conducted in the manners and circumstances described, do not involve offers or sales of securities. For self or solo staking, the node operator stakes its own digital commodities and contributes resources to participate in validation, qualifying for protocol-determined rewards—activities that do not involve a reasonable expectation of profits from the essential managerial efforts of others. The interpretation extends to custodial staking arrangements and liquid staking, provided the provider’s actions remain administrative or ministerial.

On wrapping, the Commission concludes that redeemable wrapped tokens backed and redeemable one-for-one for a deposited non-security crypto asset that is not subject to an investment contract do not involve securities transactions. Such tokens merely evidence entitlement to the deposited asset and lack the economic characteristics of securities.

The Commission also addresses airdrops, explaining that airdrops of non-security crypto assets that are not subject to an investment contract do not involve the offer or sale of securities.

Practical Implications

The Interpretation provides substantially greater certainty for market participants. For non-security crypto assets within the digital commodity, digital collectible and digital tool categories, the core assets themselves are not securities. Issuers should calibrate disclosures to specify milestones and post-fulfillment status to support separation. Stablecoin issuers should align plans with the GENIUS Act’s issuer categories and effective-date triggers. Although the Interpretation constitutes an interpretive rule not subject to notice-and-comment requirements under the Administrative Procedure Act, the SEC signals ongoing openness to input and may refine, revise or expand the Interpretation. Market participants should proactively engage through comments and closely monitor developments.

Read the author’s full paper.

Dario de Martino is Partner and co-chair of global FinTech and Blockchain Group, A&O Shearman.