The U.S. Securities and Exchange Commission (SEC), alongside the Commodity Futures Trading Commission (CFTC), released a regulatory framework on March 17, 2026, clarifying the conditions under which crypto assets fall under investment contract rules and become subject to securities laws. The core threshold: a non-security crypto asset becomes 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.
The SEC stated: "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." This mirrors the longstanding Howey test, focusing on reliance on others' efforts for profit.
Five-Category Taxonomy: Classification Does Not Dictate Treatment
The framework introduces a structured taxonomy dividing crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. The categories are based on characteristics, uses, and functions: digital commodities derive value from network use, digital collectibles from cultural demand, digital tools from functional roles, stablecoins from price stability mechanisms, and digital securities from explicit financial rights.
Classification alone does not dictate regulatory treatment. Digital commodities, collectibles, and tools generally fall outside securities laws because they do not involve profit expectations tied to managerial efforts. Stablecoins may or may not qualify depending on structure, while digital securities are within the regulatory perimeter. The deciding factor remains whether an issuer creates an investment contract through promises that shape investor expectations.
The CFTC noted it will administer the Commodity Exchange Act consistently with this interpretation, especially for non-security crypto assets that may qualify as commodities.
Dynamic Oversight: Status Can Shift Over Time
The SEC’s approach allows a crypto asset’s regulatory status to change over time. If issuer commitments drive expectations of profit, the asset may be linked to a securities transaction; if those commitments are fulfilled or no longer relevant, that link can dissolve. This framework, coordinated with the CFTC, centers on economic reality and investor reliance rather than the technical form of the asset.
The new policy aligns with SEC Chairman Paul Atkins' push to replace enforcement pressure with rule clarity, aiming to bring capital back onshore. The framework provides much-needed legal certainty for crypto markets operating under U.S. jurisdiction.