SEC sets crypto token taxonomy, clarifies non-security rules

The U.S. Securities and Exchange Commission (SEC) issued an interpretation following its memorandum of understanding with the Commodity Futures Trading Commission (CFTC), setting out a token taxonomy for digital assets and clarifying how non-security crypto assets are treated under federal securities laws. The agency described the document as an interim guide while Congress considers digital-asset market structure legislation and said it aims to define regulatory jurisdiction with the CFTC.

According to the notice, the framework groups tokens into digital commodities, digital collectibles, digital tools, stablecoins and digital securities. It explains when a “non-security crypto asset” may or may not be an investment contract subject to SEC oversight. The document also addresses how securities laws apply to airdrops (free token distributions), protocol mining (token issuance for validating transactions), protocol staking (pledging tokens to secure networks) and wrapping of non-security tokens (packaging assets for use across protocols). The commission urged market participants to review the interpretation to understand how oversight would be divided with the CFTC.

SEC Chair Paul Atkins has long vowed clearer crypto rules. “This is what regulatory agencies are supposed to do: draw clear lines in clear terms,” he stated in prepared remarks at the DC Blockchain Summit. “It also acknowledges what the former administration refused to recognize — that most crypto assets are not themselves securities. And it reflects the reality that investment contracts can come to an end.”

Atkins also indicated that, under the interpretation, “only one crypto asset class remains subject to the securities laws”: tokenized versions of traditional securities. The SEC indicated the taxonomy is intended to reduce confusion by grouping tokens and applying long‑standing securities law concepts to common crypto activities.

The timing aligns with ongoing Senate negotiations over a digital-asset market structure bill that is expected to expand the CFTC’s authority over cryptocurrencies. The SEC characterized its interpretation as an interim step for firms and investors while lawmakers work on legislation.

At the DC Blockchain Summit, Atkins encouraged developers, exchanges and custodians to provide feedback on the interpretation, emphasizing that the taxonomy is meant to help firms assess which activities fall under securities laws.