For years, the United States treated its own crypto industry like a suspect. Under former U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler, virtually every cryptoasset was presumed to be a security, and the agency’s preferred mode of “regulation” was the enforcement action. Crypto builders didn’t get rules; they got lawsuits. Thankfully, that era is now over.
On 17 March 2026, the SEC, under Chairman Paul Atkins, published an interpretation note that does something remarkably simple: it tells the U.S. crypto industry, clearly and in plain language, what the law actually requires. The result is the most significant positive shift in U.S. digital asset policy in over a decade.
Indicative of a new era of close cooperation, rather than competition, between the SEC and the U.S. Commodity Futures Trading Commission (CFTC), the CFTC joined the SEC’s interpretation note to provide a commitment to administer the Commodity Exchange Act in a manner that is consistent with the Commission’s interpretation.
A Clear Taxonomy at Last
The SEC interpretation classifies cryptoassets into five intuitive categories.
Digital Commodities are tokens intrinsically linked to the operation of a functional crypto system – think Bitcoin, Ether, Solana, XRP, Algorand, Dogecoin, and a dozen others the SEC explicitly names as examples.
Digital Collectibles cover NFTs, rights to artwork, music, and videos, Fan Tokens, and cultural tokens like CryptoPunks and WIF.
Digital Tools are tokens that perform a practical function such as a membership, credential, or identity badge, with the Ethereum Name Service (ENS) domain names and event tickets provided as examples.
Stablecoins are addressed in line with the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act – the U.S. legislation passed in 2025), with “payment stablecoins” issued by permitted issuers excluded from the definition of “security” by statute, while other stablecoins may or may not qualify for exclusion depending on their specific characteristics.
Digital Securities cover tokenized financial instruments that carry the economic hallmarks of traditional securities, irrespective of whether the tokenization is done by the issuer of the underlying securities or unaffiliated third parties.
The SEC has determined that the first three categories (digital commodities, digital collectibles, and digital tools) are not securities. Full stop. The fourth category (payment stablecoins) have their own specific legislation which excludes them from the securities definition, while the fifth category (digital securities) are securities as they are mere digital ledger representations of real-world securities.
This clear, unambiguous interpretation is a gamechanger of enormous proportions, and a huge sigh of relief, for the U.S. crypto industry, which had hitherto faced over 100 enforcement actions under the SEC’s cantankerous previous leadership.
This taxonomy matters because it replaces ambiguity with architecture. Under the previous regime, a project launching a governance token for a functional Layer 1 network had no reliable way to know whether the SEC would consider that token a security. The answer depended on how aggressively the SEC chose to apply the “Howey test” (referring to “SEC v. W.J. Howey Co.”, a 1946 Supreme Court case) to the particular facts, with no published framework to guide expectations. Now, a builder can read the interpretation, map their token to a category, and understand their obligations. That is how regulation is supposed to work.
To quote from my critique of former U.S. president Joe Biden’s hostile stance on crypto in the White House Economic Report (2023), clear regulatory guidance must precede enforcement.
“First, you make the rules; next, you supervise; then, you enforce.”
It should be noted that even during the chaotic reign of Gensler’s regulation-by-enforcement regime, an SEC commissioner, the fiercely independent-minded Hester Peirce, often spoke out strongly against her agency’s approach, arguing instead for rulemaking to provide regulatory clarity, the very thing that Atkins’ SEC has now done.
Reining In the Howey Test
The interpretation also tightens how the Howey test applies to crypto. A non-security cryptoasset can become subject to an investment contract through the issuer’s own representations or promises, but it can also separate from that investment contract once those promises are fulfilled or clearly abandoned. This separation principle is critical: it means a token sold in a fundraising round with development promises is not forever tainted as a security. Once the network goes live and the promises are met, secondary trading is just trading, not a securities transaction. This is both legally sound and practically workable.
It is an interpretation that is pro-innovation by being cognizant of the peculiarities of public, permissionless blockchain networks, which typically begin as projects led by individuals or small groups of people but are subsequently surrendered to decentralized management thereafter. The best example of this is the Bitcoin network, which was created by the pseudonymous founder, Satoshi Nakamoto, but is not controlled by him.
Network Activities Get the All-Clear
The SEC also provides an equally welcome interpretation in the treatment of protocol mining, protocol staking, wrapping, and airdrops. Each of these fundamental public crypto network activities is analyzed and, under the conditions described, found not to involve securities transactions.
Staking rewards are characterized as compensation for administrative services to a network, not profits derived from the managerial efforts of others. Wrapped tokens and staking receipt tokens are treated as mere receipts for the underlying asset, not new securities. Airdrops where recipients provide no consideration to the issuer are deemed to fail the first prong of the Howey test entirely. These conclusions will liberate enormous amounts of activity that had been chilled by legal uncertainty.
From Regulation by Enforcement to Regulation by Engagement
The contrast with the Gensler era could not be sharper. Between 2021 and 2024, the SEC brought enforcement actions against dozens of crypto firms on the theory that their tokens were unregistered securities, often without providing any prior guidance that would have allowed those firms to comply. Projects were punished not for fraud, but for the “crime” of building in a new technological paradigm without a regulatory playbook that the SEC itself refused to write.
SEC chair, Paul Atkins, and the Crypto Task Force (established the day after Donald Trump’s inauguration for his second term as U.S. president) deserve credit for abandoning this approach and for engaging with industry through roundtables, written submissions, and over 300 pieces of public input before issuing this interpretation.
Righting Past Wrongs
That said, clarity going forward is not enough. The SEC should also look backward. Firms that were fined, sanctioned, or forced into costly settlements under the prior regime, based on legal theories that the SEC itself has now effectively repudiated, deserve reconsideration. Where enforcement actions rested on the premise that tokens now classified as digital commodities/collectibles/tools were securities, the SEC should review those cases and, where appropriate, refund fines and vacate penalties.
Justice requires not only getting the rules right today but acknowledging that the rules were applied wrongly yesterday. A formal review process, perhaps led by the Crypto Task Force, would send a powerful signal that the U.S. government is serious about earning back the trust of innovators it once persecuted.
Looking Ahead
The SEC’s March 2026 interpretation is not the end of the road. The SEC itself calls it a “first step” and is soliciting further public comment. Tailored disclosure frameworks, realistic registration paths, and joint SEC-CFTC oversight under the Project Crypto initiative all remain works in progress. But for the first time in years, the direction of travel is unmistakably positive. American crypto policy has turned a corner. Now the task is to maintain the momentum.
Olu Omoyele is the founder & CEO of DeFi Planet. He has over two decades of experience in financial regulatory policy and banking risk management. Chain of Thoughts is his regular column on the cryptoverse.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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