Crypto regulation in the US is advancing, paving a compliant path forward for the industry. On March 17, the US SEC clarified the application of Federal Securities Laws to crypto assets, offering a clearer interpretation for the industry.
The CFTC joined the regulator to provide guidance.
SEC and CFTC clarified the crypto legislative framework
The latest guidance released by the two regulators in the US facilitates the codification into law of a comprehensive market structure framework.
SEC Chairman Paul Atkins stated that after more than a decade of uncertainty, regulatory agencies are drawing clear lines in clear terms. He highlighted that the new framework acknowledges “what the former administration refused to recognize”: most crypto assets are not themselves securities.
CFTC Chairman Michael S. Selig stated that for too long, American builders, innovators, and entrepreneurs have awaited clear guidance on crypto assets’ status, and now, the wait is over.
Together with Atkins, he is committed to fostering a regulatory environment that allows the crypto industry to flourish in the US with clear and rational rules that will set the base for the new frontier of finance.
The official SEC notes include multiple sections, such as the definition of a security, the status of crypto assets, and crypto asset transactions. new crypto categories, clarifying the application of federal securities laws to:
- Airdrops
- Protocol mining
- Protocol staking
- Wrapping of a non-security crypto asset
Classification of crypto assets
The SEC noted that crypto assets encompass a broad range of instruments with varying characteristics, uses, and functions.
Crypto assets are classified into 5 categories:
1. Digital commodities
Digital commodities are defined as crypto assets that are intrinsically linked to and derive value from the programmatic operation of a functional crypto system, supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others.
Examples include 16 digital assets:
- Aptos (APT)
- Avalanche (AVAX)
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Cardano (ADA)
- Chainlink (LINK)
- Dogecoin (DOGE)
- Ether (ETH)
- Hedera (HBAR)
- Litecoin (LTC)
- Polkadot (DOT)
- Shiba Inu (SHIB)
- Solana (SOL)
- Stellar (XLM)
- Tezos (XTZ)
- XRP (XRP)
2. Digital collectibles
Digital collectibles are crypto assets designed to be collected and/or used. Many represent or convey rights to artwork, music, videos, trading cards, in-game items, or digital representations/references to internet memes, characters, current events, or trends.
They lack intrinsic economic properties/rights, such as generating passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity.
Digital collectibles are not securities, according to the SEC.
Examples include:
- CryptoPunks
- Chromie Squiggles
- Fan Tokens
- WIF
- VCOIN
3. Digital tools
Digital tools are crypto assets, without intrinsic economic properties/rights, that perform a practical function, such as a membership, ticket, credential, title instrument, or identity badge.
They are commonly issued for use in connection with crypto systems and are non-transferable. Their value is derived from practical functionality, and they may be issued by a central party or autonomously in accordance with the programmatic functioning of a crypto system.
Digital tools are not considered securities.
Examples include:
- Ethereum name Service domain names
- CoinDesk’s Microcosms NFT Consensus Ticket
4. Stablecoins
Stablecoins are defined as crypto assets designed to maintain a stable value relative to a reference asset like the US dollar.
Payment stablecoins issued by a permitted issuer are not securities.
5. Digital securities
Digital securities, also known as tokenized securities, are financial instruments enumerated in the definition of security that are formatted as or represented by a crypto asset, where the record of ownership is maintained in whole/part on or through one or more crypto networks.
SEC classification is a turning point for institutional adoption
Bitget’s CEO, Gracy Chen, addressed the SEC’s latest formal classification of crypto assets, saying that it’s a step forward towards clear regulation, especially for digital commodities, collectibles, and stablecoins.
According to Chen, the new framework has the following benefits:
- Reduces long-standing ambiguity
- Focuses on how assets are structured, marketed, and used
- Powers sustainable long-term development
- Encourages compliant innovation
- Fuels higher institutional adoption
- Trigger significant capital inflows
Bitget‘s CEO highlighted that the new rules around non-security categories like commodities open the door to scaled participation in altcoins and other tokens, which were previously viewed as high-risk due to enforcement uncertainty
Chen noted that some ongoing debates around edge cases could trigger short-term volatilty in some assets, but overall, the new regulation framework will:
- Boost market confidence
- Accelerate product development (new derivatives, tokenized offerings)
- Support mainstream adoption
What’s next for the industry?
The SEC’s Chairman also mentioned the importance of clearer regulation for the crypto industry that will offer innovators more pathways to raise capital in the US, while providing appropriate investor protections.
In his recent speech, “Regulation Crypto Assets: A Token Safe Harbor”, Atkins also mentioned the necessity for:
- Startup exemption that could last up to 4 years and offer developers a regulatory runway to reach maturity
- Fundraising exemption for investment contracts involving certain crypto assets, which would allow entrepreneurs to raise up to $75 million during 1 year
- Investment contract and safe harbor from the definition of security for certain crypto assets, which could be applied once certain conditions are met
Overall, amidst clear industry regulation, Atkins forsees a new chapter for American innovation.
