The Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”) issued a joint interpretive release on March 17, 2026, to clarify how federal securities laws apply to cryptocurrency assets, aiming to replace years of uncertainty and enforcement‑driven regulation with a more predictable framework. The release reaffirms that the Howey test—requiring an investment of money in a common enterprise with an expectation of profits from the efforts of others—remains the governing standard for determining whether a crypto transaction constitutes an investment contract. However, the agencies acknowledge that applying Howey to crypto has been difficult due to the wide variation in asset design, governance, and functionality.
To provide clearer guidance, the agencies categorize crypto assets into five groups: Digital Commodities, Digital Collectibles, Digital Tools, Stablecoins, and Digital Securities. Only Digital Securities are inherently securities; they are defined as traditional financial instruments represented in crypto form. Digital commodities, collectibles, and tools are not securities because they do not involve profit expectations tied to managerial efforts. Stablecoins may or may not be securities depending on their structure, though payment stablecoins issued by permitted issuers are excluded under the GENIUS Act.
The release also clarifies that certain activities—such as protocol mining, staking, and wrapping—do not constitute securities transactions because they are administrative rather than investment‑oriented. Free airdrops are not investment contracts, though promotional or task‑based airdrops may be, and any crypto asset can become part of an investment contract depending on how it is marketed or sold. Conversely, an asset can cease to be part of an investment contract once purchasers no longer reasonably expect profits from an issuer’s managerial efforts.
The agencies expect the interpretation to reduce legal uncertainty, encourage U.S.-based crypto innovation, improve market efficiency, lower compliance costs, and harmonize SEC/CFTC oversight. If you have questions about cryptocurrency as it relates to securities, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets group.