US SEC Defines Crypto Securities, Signals Clarity for US Traders and Institutions

The US Securities and Exchange Commission (SEC) has introduced its first formal framework defining when crypto assets qualify as securities, offering long-awaited clarity to the digital asset industry.  While indicating that most crypto assets may not fall under federal securities law, the guidance presented by SEC chair Paul Atkins outlines that different types of tokens will be assessed under federal securities laws. This decision marks a significant change in regulatory approach and could reshape how the crypto market operates in the US. 

US Regulator Shifts Focus to Function and Market Behaviour

Instead of focusing on the labels, this framework focuses on the economic nature of crypto assets and evaluates factors such as decentralisation, issuer involvement, and investor expectations. Assets that are not dependent on a central entity or promise profits based on managerial efforts are less likely to be classified as securities. The guidance is also in line with the Commodity Futures Trading Commission (CFTC), which has indicated that most digital assets may fall under commodities regulation. 

The SEC's interpretive release also introduces a structured classification system that groups crypto assets based on their characteristics and use cases, while clarifying that existing securities laws, including the Howey test, will continue to guide how these assets are assessed.

But what is the exact definition of crypto assets that is provided by the SEC? It simply states that a crypto asset is not a term defined in the federal securities laws and describes it as a technological concept. He further added that the SEC's interpretation “establishes four asset categories that are not deemed securities: digital commodities, digital collectibles, digital tools, and payment stablecoins under the GENIUS Act” reinforcing that most crypto assets are not inherently securities. 

This development expands on previous signals from regulators globally and in the US. In April 2025, the SEC clarified that certain stablecoins may not qualify as securities if they do not promise returns or involve profit expectations. Similarly, regulators in New Zealand stated that the NZDD stablecoin is not considered a financial product under local law, highlighting a broader trend of refining crypto regulations as the sector evolves.

All things considered, it is anticipated that the SEC's most recent recommendations will lessen regulatory uncertainty in the US cryptocurrency sector. For traders, it is a haven as it brings clarity on which assets may face meticulous scrutiny, while exchanges could benefit from reduced legal uncertainty in listing tokens. Institutions may also see this as a positive step, as clarity in rules could improve trader confidence and encourage wider participation in the crypto ecosystem. 

However, some uncertainty may still remain in how these rules are applied. For example, a token seen as safe today could later face stricter rules if its use changes, which may force exchanges to remove it or companies to follow additional regulations. This could make things harder for some crypto projects in the short term.