From Enforcement to Framework: The SEC and CFTC's Crypto Asset Playbook

April 7, 2026

From Enforcement to Framework: The SEC and CFTC’s Crypto Asset Playbook

LinkedIn Facebook X Send Embed On March 17, 2026, the SEC and CFTC jointly issued the Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets (“Interpretation”) [1], providing the most comprehensive guidance to date on how federal securities laws and the Howey [2] investment contract test apply to crypto assets. The Interpretation is the first product of "Project Crypto," a joint SEC-CFTC harmonization effort announced in January 2026, and marks a deliberate departure from the prior "regulation by enforcement" approach. This alert summarizes the key takeaways for financial services firms. The core message: many crypto assets are not securities, but how they are offered and sold still matters.

The Five Categories of Crypto Assets

The SEC, per the Interpretation, now classifies crypto assets into five categories. They view assets in three of the categories as lacking the economic characteristics of a security and not any financial instrument enumerated in the statutory definition of a security, including an investment contract.

• Digital Commodities - assets linked to functional crypto systems whose value derives from system utility and supply/demand (e.g., Bitcoin, Ether, Solana, XRP, Cardano, Dogecoin). Because functional crypto systems are decentralized, purchasers lack a reasonable expectation of profits from the essential managerial efforts of others.
• Digital Collectibles - assets designed to be collected and used, such as artwork, music, trading cards, and even meme coins (e.g., CryptoPunks, Fan Tokens, WIF). Digital collectibles lack intrinsic economic properties such as passive yield or rights to future income. Their value depends on subject matter, popularity, or scarcity and not the managerial efforts of creators. [3]

• Digital Tools - assets performing practical functions such as memberships, tickets, and credentials (e.g., Ethereum Name Service domains). Digital tools are acquired for functional utility, not as investments. Resale value is driven by practical use, and developers typically do not make representations giving rise to profit expectations.
  Conversely, the SEC noted that the securities analysis will remain fact-specific with respect to other categories of digital assets:

• Stablecoins - assets designed to maintain stable value relative to a reference asset (e.g., the U.S. dollar ). Payment stablecoins meeting GENIUS Act requirements will be excluded from the security definition. [4] Other stablecoins remain subject to facts-and-circumstances analysis.

• Digital Securities - financial instruments within the statutory definition of "security" that are formatted as or represented by crypto assets, with ownership recorded on crypto networks. Includes both issuer-tokenized securities and third-party-tokenized securities (where holder rights may differ from those of the underlying security). Critically, a non-security crypto asset subject to an investment contract is not a digital security. The distinction is that a digital security is itself a security by virtue of being a digitized enumerated financial instrument.
  The Investment Contract Analysis

Although certain crypto assets may not be securities, non-security crypto assets can be offered and sold subject to an investment contract, which is a security. The release provides important clarification on how the Howey test applies. A crypto asset becomes subject to an investment contract when an issuer induces investment with representations or promises of essential managerial efforts from which purchasers would reasonably expect profits. Key factors include:

• representations originate from or are authorized by the issuer;
• representations must be made prior to or contemporaneously with the sale (not retroactively);
• representations are communicated through identifiable channels (website, social media, whitepapers, filings); and
• detailed business plans, milestones, and profit explanations are more likely to create reasonable profit expectations than vague statements. While the aforementioned is grounded in existing Howey principles, the Interpretation introduces new concepts to the traditional investment contract analysis: "separation" pathways through which a non-security crypto asset ceases to be subject to an investment contract. These include:

1. The issuer fulfills its representations (e.g., completing development milestones, delivering functionality, or open-sourcing code); or
2. A sufficiently long period passes without progress and the issuer has abandoned or publicly announced abandonment of the promised efforts. [5] Notably, an asset would not remain subject to the investment contract in secondary market transactions where purchasers would no longer reasonably expect the issuer's representations to remain connected to the asset.

Mining and Staking

Protocol mining (proof-of-work validation) as described in the release is another crypto asset-related activity that does not involve the offer and sale of a security. Digital commodities are not enumerated financial instruments, and mining is characterized as administrative or ministerial activity, not essential managerial efforts. Miners profit from their own computational work and not from the efforts of others.

Mining pools do not alter this analysis. Pool operators' activities (coordinating resources, maintaining infrastructure, distributing rewards) are administrative, not managerial.

Staking on proof-of-stake networks receives the same analysis and conclusion: staking is not a security because it does not involve profits derived from the essential managerial efforts of others.

The SEC addresses four staking types—solo staking, self-custodial staking with a third-party operator, custodial arrangements, and liquid staking—concluding that none involves securities because the activities are administrative and rewards flow programmatically from the protocol. [6]

The release further identifies four permissible ancillary services that remain ministerial as they are facets of protocol staking that itself is not the essential managerial efforts of others: slashing coverage, early unbonding, alternate reward payment schedules, and aggregation. Finally, liquid staking tokens are also not securities, provided the underlying asset is not a security or subject to an investment contract.

Certain activities, however, fall outside the release's scope and would require additional scrutiny with respect to whether the activity could result in an investment contract. These include where a provider:

• exercises discretion over staking decisions;
• guarantees returns;
• facilitates use of staking receipt tokens in DeFi applications;
• engages in restaking; or
• offers services beyond the four enumerated ancillary services. Firms operating staking-as-a-service offerings should carefully evaluate whether their activities remain within the parameters or are instead out of scope of the interpretation.

Impact on Broker-Dealers and Investment Advisers

The release carries significant practical implications for broker-dealers and investment advisers. Previously, the uncertain securities status of most crypto assets exposed intermediaries to potential liability for transacting in unregistered securities. The five-category classification system, and in particular the express identification of digital commodities, and clarified investment contract analysis now provide a stronger and more defensible interpretive foundation for client-facing crypto activities. As does the clarification that non-security crypto assets sold as an investment contract do not necessarily remain subject to investment contracts in secondary market transactions.

This Interpretation represents a meaningful step forward for an industry that has navigated years of regulatory uncertainty. It does, however, leave several questions unresolved. One of these is a regulatory framework for crypto exchanges (although the SEC has signaled that further guidance is forthcoming for intermediaries). Another is the application of securities laws to DeFi protocols such as decentralized exchanges, lending protocols, and DAOs. Fact-specific analysis will remain essential, but the SEC and CFTC have established a clearer framework. Industry participants should proactively assess how this guidance applies to their existing operations and emerging product and business lines.

[1] https://www.sec.gov/files/rules/interp/2026/33-11412.pdf

[2] SEC v. W.J. Howey Co *.***, 328 U.S. 293 (1946).

[3] However, the release cautions that fractionalized digital collectibles enabling fractional ownership interests could constitute securities offerings, as they may involve essential managerial efforts from which purchasers expect to profit.

[4] The GENUIS Act has not yet been enacted. The SEC adopted the Division of Corporation Finance's prior staff statement on "Covered Stablecoins" as a Commission-level interpretation pending the GENIUS Act.

[5] However, separation does not absolve the issuer of liability for the original unregistered offering, or any material misstatements made during the existence of the investment contract.

[6] For self staking and self-custodial staking, the SEC reasons that the node operator is merely performing an administrative activity to validate transactions and secure the network, earning rewards programmatically from the protocol rather than from the essential managerial efforts of any third party. For custodial arrangements and liquid staking, the SEC characterizes the provider's role as administrative or ministerial because the depositor (not the provider) directs whether, when, and how much to stake; rewards flow programmatically from the network protocol rather than being guaranteed by the provider; deposited assets are segregated and may not be lent, pledged, rehypothecated, or used for leverage, trading, or speculation; and the provider's only discretionary role may be selecting a node operator, which itself may be automated.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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Bressler, Amery & Ross, P.C.
2026

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