The SEC published a token taxonomy jointly with the CFTC. This 68-page document divides crypto assets into five categories. Only one of them falls under US securities laws. As a result, the previous approach of treating nearly all digital assets as potential securities comes to an end.
SEC Chairman Paul Atkins and CFTC Chair Michael Selig presented the guidance on March 17. Six days earlier, both agencies had signed a Memorandum of Understanding (MOU). In it, they agreed on joint market surveillance and coordinated enforcement. The MOU also officially classifies Bitcoin and Ethereum as digital commodities under CFTC oversight. A years-long jurisdictional dispute between the two agencies now comes to an end.
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Five categories instead of blanket suspicion: the SEC token taxonomy in detail
The taxonomy distinguishes five classes: Digital Commodities, Digital Collectibles, Digital Tools, Stablecoins, and Digital Securities. Only the last category falls under US securities laws. It refers to traditional financial products whose proof of ownership resides wholly or partly on a blockchain.
Tokens classified as Digital Commodities derive their value from network operations and from supply and demand. The key criterion is that value does not primarily stem from the efforts of third parties. Meanwhile, Digital Collectibles cover NFTs such as rights to art, music, or in-game items. So-called Digital Tools, by contrast, serve practical functions like memberships, tickets, or digital IDs.
For stablecoins, the SEC draws finer distinctions. Payment stablecoins that fall under the proposed GENIUS Act and are issued by licensed entities do not qualify as securities. Other stablecoins may still be subject to securities laws depending on their structure. Also, mining rewards, staking, and airdrops without consideration do not require securities registration under the guidance. Wrapped non-security tokens retain their status as well.
Investment contracts with an expiry date: a new Howey test
The SEC token taxonomy builds on the Howey Test of 1946 but interprets it significantly more broadly. A crypto asset becomes an investment contract when an issuer markets it as an investment in a common enterprise. At the same time, the issuer must promise profits derived from its own efforts. This much aligns with existing case law.
What is new, though, is the concept of temporal expiry. An investment contract ends once the issuer has fulfilled its promises or can no longer fulfill them. After that point, the asset falls outside securities regulation. Atkins calls these "limiting principles." A token can therefore outgrow its securities status once the network is sufficiently decentralized and the issuer's influence fades.
"After more than a decade of uncertainty, this interpretation will give market participants a clear picture of how the Commission treats crypto assets under the securities laws. This is what regulators are supposed to do: draw clear lines in clear terms." - Paul Atkins, SEC Chairman
Still, a legal caveat remains. The guidance is not a formal rulebook but an interpretive guidance. It therefore lacks the legal force of an enacted rule. Without legislative backing from Congress, a future administration could reverse the interpretation. Accordingly, the passage of the CLARITY Act remains critical.
Safe harbor for crypto startups: three exemptions planned
Beyond the taxonomy, Atkins announced a three-part safe harbor program at the DC Blockchain Summit. He intends to put it to an SEC vote. The Startup Exemption would allow crypto firms to raise capital or operate for several years without SEC registration. However, Atkins did not specify exact caps.
The Fundraising Exemption applies to investment contracts for crypto assets. Under this provision, issuers could raise up to a certain amount within 12 months without registration. Finally, the Investment Contract Safe Harbor provides clarity on when an asset falls under securities laws. It takes effect once the issuer has permanently ceased all material proprietary efforts.
Atkins expects the SEC to release a formal proposal for public consultation in the coming weeks. This document is expected to span over 400 pages. The exact limits for the Startup Exemption and Fundraising Exemption will be set during the rulemaking process.
From regulation by enforcement to a token taxonomy
Under Atkins' predecessor Gary Gensler, the SEC pursued an aggressive stance against the crypto industry. In fiscal year 2024 alone, the agency initiated 583 enforcement actions and imposed penalties totaling $8.2 billion. Gensler claimed nearly all crypto assets were securities. At the same time, the CFTC classified Bitcoin and Ethereum as commodities. As a result, the SEC sued Coinbase while the CFTC approved derivatives from the same company.
Atkins took over as SEC Chairman in January 2025 under the Trump administration. By mid-2025, he announced "Project Crypto," a program for more open regulation. In November 2025, he first signaled a token taxonomy. Early in 2026, the SEC also dropped crypto from its enforcement priorities.
Meanwhile, the crypto industry is investing heavily in political influence. For the crypto PAC "Fairshake," Coinbase ($33 million), Ripple ($48 million), and Andreessen Horowitz ($23.8 million) committed over $193 million during the 2026 election cycle. Critics like Senator Elizabeth Warren warn that Atkins' proximity to the industry could weaken investor protections.
