SEC and CFTC Align on Crypto Classification, Affirming Most Assets Are Not Securities

Most crypto assets are not securities, according to new guidance jointly issued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. The interpretation, detailed in a joint statement, establishes how federal laws apply to digital assets and clarifies when a token transitions from being a security to a commodity.

The SEC has historically treated many crypto tokens, particularly those from initial coin offerings or tied to profit expectations, as securities under the Howey Test. Conversely, the CFTC has classified major assets like Bitcoin and Ether as commodities under the Commodity Exchange Act.

SEC Chairman Paul Atkins stated the interpretation provides market participants with clarity after years of uncertainty, acknowledging that most crypto assets are not securities. The joint framework creates a clear classification system for various digital assets, including commodities, collectibles, and utility tokens.

It further explains how a crypto asset not initially a security can fall under securities laws if part of an investment contract, and how it can later exit that classification. CFTC Chair Michael Selig confirmed the agency will align its approach with the SEC, calling the move long-awaited clarity for the industry.

The guidance reduces regulatory ambiguity for crypto firms, lowers the risk of inconsistent treatment of assets, and diminishes the prevalence of regulation-by-enforcement. This development supports ongoing Congressional efforts to establish a unified market structure for digital assets.