The Securities and Exchange Commission (SEC) issued a notice clarifying how the federal securities laws apply to certain crypto assets and transactions involving crypto assets.
This effort to provide greater clarity regarding the commission’s treatment of crypto assets complements Congressional endeavors to codify a comprehensive market structure framework into statute.
The SEC’s 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.
“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,” SEC Chairman Paul Atkins said. “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.”
The Commodity Futures Trading Commission (CFTC) joined the interpretation to provide guidance that the CFTC will administer the Commodity Exchange Act consistent with the commission’s interpretation.
“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,” CFTC Chairman Michael Selig said. “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 interpretation will be published on SEC.gov and in the Federal Register.