Recently, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have jointly provided a new interpretation to clarify how federal securities laws apply to crypto assets and related transactions.

According to the CFTC, it will administer the Commodity Exchange Act in line with this joint interpretation. Certain non-security crypto assets could be categorized as commodities under this regulatory framework.

The interpretation outlines categories for tokens such as digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. It also examines how a non-security crypto asset might become subject to or exempt from an investment contract. Additionally, the document addresses federal securities laws in relation to airdrops, protocol mining, protocol staking, and the wrapping of non-security crypto assets.

Significance and Jurisdiction

This joint interpretation signifies a change from previous administrations’ approaches and highlights that most crypto assets are not securities. It is presented as an interim measure until comprehensive regulatory legislation can be established by Congress.

The delineation of jurisdictional responsibilities between the SEC and CFTC has historically caused uncertainty for market participants, issuers, and developers. This new interpretation aims to clarify these boundaries, thereby reducing ambiguity in capital formation and product development within the US digital asset sector.

The joint interpretation will be publicly available on CFTC.gov and through publication in the Federal Register. Both agencies encourage all stakeholders, such as innovators, issuers, and investors, to review this guidance for better understanding of their regulatory obligations.

CFTC Chairman Michael S. Selig stated that this interpretation will end a period of regulatory uncertainty for crypto entrepreneurs and emphasizes the commitment to creating harmonized regulations. Similarly, SEC Chairman Paul S. Atkins noted that the interpretation provides clear definitions and acknowledges the non-security status of most crypto assets.