The Securities and Exchange Commission (SEC) today issued an interpretation clarifying how the federal securities laws apply to certain crypto assets and transactions involving crypto assets. This is a major step in the Commission’s efforts to provide greater clarity regarding the Commission’s treatment of crypto assets, and complements Congressional endeavors to codify a comprehensive market structure framework into statute. The Commodity Futures Trading Commission (CFTC) joined the interpretation to provide guidance that the CFTC and its staff will administer the Commodity Exchange Act consistent with the Commission’s interpretation.
“After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws. This is what regulatory agencies are supposed to do: draw clear lines in clear terms,” said SEC Chairman Paul S. Atkins. “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. This effort serves as an important bridge for entrepreneurs and investors as Congress works to advance bipartisan market structure legislation, which I look forward to implementing with Chairman Selig in the near future.”
“For far too long, American builders, innovators, and entrepreneurs have awaited clear guidance on the status of crypto assets under the federal securities and commodity laws,” said CFTC Chairman Michael S. Selig. “With today’s interpretation, the wait is over. Chairman Atkins and I are committed to fostering a regulatory environment that allows the crypto industry to flourish in the United States with clear and rational rules of the road. Today’s joint agency action reflects a shared commitment to developing workable, harmonized regulations for the new frontier of finance.”
The Commission interpretation:
- Provides a coherent token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.
- Addresses how a “non-security crypto asset”-which is a crypto asset that itself is not a security-may become subject to, and how it may cease to be subject to, an investment contract.
- Clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking, and the wrapping of a non-security crypto asset.
Market participants-from innovators and issuers to individual investors-should review this interpretation to better understand the regulatory jurisdiction between the SEC and CFTC. The interpretation will be published on SEC.gov and in the Federal Register.