April 7, 2026

New Paradigm for Crypto Assets: A Deep Dive into the SEC's Interpretive Release

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Key Takeaways

• Rather than adopting a new set of crypto-specific rules, the SEC analyzes crypto assets and markets through the existing legal framework: principally through the Howey test. The Release was issued in the form of interpretive guidance and does not create new legal obligations, but the SEC will administer the federal securities laws consistent with the Release.
• The Release is part of a broader SEC-CFTC coordination effort to provide greater regulatory clarity for digital assets, a point underscored by SEC Chairman Paul S. Atkins and CFTC Chairman Michael S. Selig in remarks tied to the DC Blockchain Summit on March 17, 2026.
• The Release adopts a five-category taxonomy-digital commodities, digital collectibles, digital tools, stablecoins, and digital securities-while recognizing that some crypto assets may be hybrid or fall outside the taxonomy. Digital commodities, digital collectibles, and digital tools are not themselves securities. Payment stablecoins issued by permitted payment stablecoin issuers under the GENIUS Act will be categorically non-securities once the Act becomes effective; other stablecoins remain subject to a facts-and-circumstances analysis.
• The Release distinguishes the crypto asset from the transaction in which it is offered or sold. A non-security crypto asset may be sold as part of an investment contract, and that transaction may constitute an offer or sale of a security without thereby making the crypto asset itself a security. The SEC focuses heavily on the issuer's representations, promises, and essential managerial efforts, and recognizes that the same asset may later "separate" from the investment contract once purchasers no longer reasonably expect profits from those promised efforts. Until that separation occurs, secondary-market transactions may still be treated as securities transactions.
• "Without more," certain common crypto activities-including protocol mining, protocol staking, staking receipt tokens, certain one-for-one redeemable wrapped tokens, and certain no-consideration airdrops-do not involve the offer and sale of securities, provided they involve underlying non-security crypto assets and fit the specific facts and limitations described in the Release.
• The Release provides practical guidance and a viable path to a broad range of market participants and encourages innovation and the development of novel products in the United States. At the same time, market participants should proceed with caution: as interpretive guidance, it is not necessarily binding on courts; it does not, by its terms, resolve Blue Sky treatment; and several of its conclusions, especially staking and airdrops, are expressly limited to the specific facts and circumstances described.

Introduction

On March 17, 2026, the Securities and Exchange Commission (SEC) issued a long-awaited interpretive release (the "Release"), addressing the application of federal securities laws to crypto assets and certain transactions involving crypto assets. The Release also contains guidance from the Commodity Futures Trading Commission (CFTC) stating that it will administer the Commodity Exchange Act in a manner consistent with the SEC's framework. The Release supersedes the SEC staff's 2019 Framework for "Investment Contract" Analysis of Digital Assets, solicits public comment, and notes that the SEC may refine, revise, or expand the interpretation based on the feedback it receives.

One Element of a Broader Framework; Remarks at the DC Blockchain Summit 2026

At the DC Blockchain Summit on March 17, 2026, SEC Chairman Paul S. Atkins framed the Release as the beginning, rather than the culmination, of a broader regulatory project. SEC and CFTC leadership emphasized a coordinated effort to provide greater regulatory clarity for digital assets, including in advance of potential congressional action on market structure legislation. Speakers at the summit-including agency leadership, members of Congress, and industry participants-also expressed optimism that comprehensive digital asset legislation could be considered during the current congressional session, although the timing and scope of any such legislation remain uncertain.

The Release acknowledges criticism of the SEC's earlier approach as "regulation by enforcement" and characterizes the interpretive guidance as the SEC's first step toward a clearer framework for crypto assets under the federal securities laws. [1] The Release also seems to mark the end of a drift toward what some might call "regulation by exhaustion." At 68 pages, this Release is comparatively concise by recent SEC standards. [2]

Finally, it appears that the Release is issued as a bridge to expected new legislation (including the Digital Asset Market Clarity Act) and is best understood as an important but interim framework rather than the endpoint of crypto rulemaking development. Recent statements by SEC Chairman Atkins, including those at the summit, indicate that the Release may represent only the first phase of a broader regulatory initiative concerning crypto asset issuances in the United States. Future SEC action could include proposals relating to offering pathways, exemptions, potential safe harbors, and disclosure standards.

Interpretive Guidance Rather Than Rulemaking

The SEC's approach in the Release was to apply existing authorities to the crypto asset market rather than to create a new set of crypto-specific rules. The Release expressly states that it "does not itself create any new legal obligations for issuers of, and investors in, digital securities and crypto asset-related securities." The Release reaffirms that the determination of whether a crypto asset or transaction involves a security continues to be governed by the Supreme Court's test in Howey. [3] Under Howey, a contract, transaction, or scheme is an investment contract and therefore a security where there is (1) an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profits, (4) to be derived from the efforts of others. [4] The Release also expressly aligns the SEC's views on digital assets transactions with post- Barkate case law [5] by treating a common enterprise as a required element of the analysis.

Rather than altering the Howey framework, the Release provides additional guidance on how the "efforts of others" prong applies in the context of crypto assets, with a particular focus on what constitutes "essential managerial efforts." The analysis remains highly fact-specific and depends on the design of the asset, the structure of the transaction, and the nature of the issuer's statements and ongoing involvement.

The Release balances two related principles. First, the it emphasizes substance over form and the "economic reality" of a transaction when assessing whether a crypto asset or crypto asset transaction falls within the securities laws. Thus, even where a transaction is structured to technically appear outside the securities-law framework, it may be treated as involving the offer or sale of securities if its economic reality so warrants. Second, the Release underscores the limits of the securities laws, which were not designed "to provide a broad federal remedy for all fraud." Accordingly, items purchased for use or consumption, whether physical or digital, generally fall outside the securities laws, even though there may be a potential for fraud in connection with the sale of such items, including certain digital consumables.

The Release does not create a general safe harbor. Rather, it offers a more usable Howey -based framework while leaving the analysis dependent on asset design, token functionality, transaction structure, and issuer communications. In that respect, white papers, roadmaps, milestone disclosures, official social-media statements, and public announcements regarding the completion or abandonment of promised efforts may be outcome-determinative under the SEC's framework.

Taxonomy of Crypto Assets

For purposes of the Release, the SEC classifies crypto assets into five categories based on their characteristics, uses, and functions: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. The table below tracks the Release's asset-level taxonomy and examples.

| ##### Category | ##### Security? | ##### Characteristics |
| --- | --- | --- |
| Digital commodities | No | - value derives from the system's programmatic operation and supply and demand dynamics, rather than expected profits from the essential managerial efforts of others
- necessary to participate in the associated crypto ecosystem
- typically convey certain technical rights to holders
- may convey certain governance rights
- not a security because a purchaser would not reasonably expect to profit based on the essential managerial efforts of others |
| Digital collectibles | No | - designed to be collected or used and may represent or convey rights to art, media, trading cards, video games, or meme-related assets
- no rights to the business enterprise or entity
- no intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor
- may convey certain IP rights or limited licenses
- limited or no functionality
- not a security because:

- purchase of a digital collectible is not an investment in any business or other entity associated with the creator of the digital collectible
- no expectation of profits from any essential managerial efforts of the creator of the digital collectible

• offer and sale of fractionalized digital collectibles may constitute the offer or sale of a security | | Digital tools | No | - perform a practical function, such as a membership, ticket, credential, title instrument, or identity badge
• do not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor
• may, in some instances, be non-transferable or "soul-bound"
• not a security because: | | Stablecoins | Depends on the type of stablecoin | - payment stablecoins issued by a permitted payment stablecoin issuer in accordance with the will be categorically excluded from the definition of security as of the effective date of the act
• covered stablecoins, as defined in the statement of the Division of Corporation Finance dated as of April 4, 2025, are interpreted by the SEC not to involve the offer and sale of securities
• all other stablecoins may or may not be securities, depending on facts and circumstances | | Digital / tokenized securities | Yes | - security that is formatted as or represented by a crypto asset where the record of ownership is maintained in whole or in part on or through one or more crypto networks
• may be tokenized by or on behalf of the issuers of such securities or by third parties unaffiliated with the issuers
• the fact of tokenization does not change the nature of the underlying asset | The taxonomy set forth above is not exhaustive. The Release expressly notes that some crypto assets may have hybrid characteristics or fall outside the taxonomy altogether (for example, Fan Tokens have hybrid characteristics and could also be classified as digital tools).

Investment Contract Analysis and "Separation" Concept

The Release distinguishes between the crypto asset itself and the transaction in which it is offered or sold. In the SEC's view, a crypto asset that is not itself a security may nonetheless be offered or sold as part of an investment contract (and, therefore, an offer or sale of securities). It may occur when, in light of the surrounding facts and circumstances, purchasers are reasonably led to expect profits based on the issuer's essential managerial efforts, because of the representations and promises conveyed to such purchasers. [6]

The Release further explains that the source, timing, manner, and specificity of those representations matter: statements in agreements, official websites, official social media, direct communications, regulatory filings, and white papers may all be relevant, while post-sale statements do not retroactively convert a prior sale transaction into an investment contract. The SEC also indicates that detailed, actionable representations-such as a roadmap with milestones, timeline, funding and resource disclosures, and an explanation of how the issuer's efforts will create purchaser profits-are more likely to create reasonable profit expectations than vague statements lacking those features.

Furthermore, the Release expressly recognizes that a non-security crypto asset sold subject to an investment contract does not necessarily remain subject to that investment contract in perpetuity. If purchasers could no longer reasonably expect the issuer's promised essential managerial efforts to remain connected to the asset, the non-security crypto asset "separates" from those representations or promises and, thereafter, is no longer subject to the associated investment contract on that basis. Until that separation occurs, however, secondary-market offers and sales of the non-security crypto assets may remain securities transactions.

The Release illustrates how a crypto asset may initially be sold subject to an investment contract and later cease to be subject to that investment-contract overlay.

Fulfillment of the Issuer's Representations or Promises

The Release identifies fulfillment of the issuer's representations or promises as one non-exclusive indicator of separation of the crypto asset from the investment contract. The Release states that a non-security crypto asset that was offered and sold subject to an investment contract is no longer subject to that investment contract once the issuer has fulfilled the essential managerial efforts it represented or promised it would undertake, even if the issuer continues to provide efforts that are not essential managerial efforts. The SEC gives examples of the types of promised efforts that may matter here, including developing promised functionality or features, achieving software-development milestones on a roadmap, or open-sourcing related code. The Release also makes it clear that whether those promises have been fulfilled depends on how the issuer itself defined them when marketing the investment contract. Thus, if the issuer promised "decentralization" or a stated level of "functionality," the relevant benchmark is the issuer's own description rather than the general market perception or understanding of those concepts.

The Release illustrates the point using both immediate-delivery and delayed-delivery offerings. In an immediate-delivery structure, such as an ICO-style transaction, the issuer agrees to deliver newly generated non-security crypto assets immediately in exchange for investment. In a delayed-delivery structure, such as a SAFT-style arrangement, the issuer agrees to deliver the non-security crypto assets later in exchange for investment made today. In either case, the sale occurs when the parties enter into the agreement, and the non-security crypto asset becomes subject to an investment contract at that time, regardless of when delivery occurs. Upon delivery, however, the asset may no longer be subject to the associated investment contract if purchasers would not reasonably expect profits from the issuer's efforts (for example, because the issuer has publicly disclosed that it completed the essential managerial efforts it promised to undertake). If, by contrast, the issuer continues providing those essential efforts or has not publicly disclosed completion, the asset remains subject to the associated investment contract.

Failure to Satisfy or Abandonment of Promised Efforts

Separation of an asset from an investment contract may also occur through failure or abandonment. In that setting, the question is not whether the issuer successfully completed the promised essential managerial efforts, but whether purchasers should reasonably expect those efforts to occur. The Release states that a non-security crypto asset that was offered and sold subject to an investment contract is no longer subject to that contract if a purchaser would not reasonably expect the issuer to be able to fulfill, or to continue to engage in, the essential managerial efforts it had represented or promised it would undertake. That may happen because a sufficiently long period of time has passed without performance and without any indication that performance is still intended, or because the issuer publicly announces that it will no longer perform those promised efforts. [7]

Finally, the Release encourages issuers that make representations or promises about essential managerial efforts to describe those efforts clearly, provide timelines and milestones, explain the resources needed to complete them, and publicly disclose when they have been completed to make the subsequent investment contract analysis straightforward.

Common Crypto Activities That Do Not Involve Securities Transactions

The Release also addresses several ubiquitous crypto activities and concludes that, in the manner and under the circumstances described in the Release, they do not involve the offer and sale of securities, assuming that the relevant activity involves a non-security crypto asset.

Protocol Mining

Covered protocol mining on public, permissionless proof-of-work networks does not involve the offer and sale of a security. That conclusion extends to solo mining and mining pools as described in the Release, on the basis that miners contribute their own computational resources and receive rewards as compensation for services to the network rather than profits derived from others' essential managerial efforts. The SEC concluded that the activities of the third parties involved in the mining pools (such as pool operators) are administrative and ministerial rather than managerial. The Release's analysis assumes pro rata reward allocation based on computational contribution and does not extend to arrangements in which passive non-miners purchase interests in the pool or miners pay for preferred reward economics.

Protocol Staking

Covered protocol staking on public, permissionless proof-of-stake networks likewise does not involve the offer and sale of a security. The Release extends that conclusion, as described in the Release, to solo staking, self-custodial staking directly with a third party, custodial staking, and liquid staking. Analogously with the services of third parties in connection with mining, the Release characterizes activities of third-party service providers as administrative and ministerial rather than managerial. The Release excludes from scope arrangements in which a custodian or liquid staking provider decides whether, when, or how much of a customer's assets to stake, or guarantees or sets the amount of rewards. The Release also expressly states that it does not address restaking.

Staking Receipt Tokens and Wrapped Tokens

The Release also concludes that a staking receipt token or redeemable wrapped token is not a security if it is merely a receipt for a non-security crypto asset that is not subject to an investment contract. For staking receipt tokens, the Release emphasizes that the token merely evidences ownership of the deposited asset and does not itself generate rewards; for redeemable wrapped tokens, the Release emphasizes one-for-one backing, one-for-one redemption, holder entitlement to the underlying asset, and the absence of any direct or indirect return, yield, profit opportunity, or additional good or service. The deposited asset must remain locked and may not be transferred, lent, pledged, rehypothecated, or otherwise used. If, however, the receipt token or wrapped token relates to a digital security or to a non-security crypto asset that remains subject to an investment contract, it is a security.

Airdrops

The Release addresses only airdrops of non-security crypto assets where recipients do not provide money, goods, services, or other consideration in exchange for the airdropped asset. On those facts, the SEC concludes that the first element of the Howey test, investment of money, is not satisfied. The Release does not extend that conclusion to airdrops for services or other structures that require recipients to provide value in exchange for the airdropped asset; does not address airdrops of digital securities; and does not alter the separate question of what constitutes a "sale" under the securities laws. It also notes that a non-security crypto asset distributed in an airdrop may later become subject to an investment contract in a subsequent transaction.

Practical Implications for Market Participants

The Release provides market participants with a clearer view of how the SEC currently analyzes digital assets and related transactions. That clarity may help reduce compliance uncertainty, assess the potential application of the federal securities laws to particular projects, inform regulatory strategy, and create greater confidence around launching novel products and services in the United States. At the same time, because the Release is interpretive and does not eliminate the need for a facts-and-circumstances analysis, market participants should avoid treating it as a categorical safe harbor.

Enhanced Regulatory Clarity

The Release generally helps market participants to distinguish between assets and transactions the SEC views as subject to the federal securities laws and those that may fall outside that framework. It also confirms that the CFTC and its staff will administer the Commodity Exchange Act consistent with the interpretation, while leaving each agency's statutory authority intact.

Issuers and Their Promises

For issuers, the Release underscores that offering documents, white papers, websites, social media posts, investor materials, and other issuer-attributable communications can determine both whether an investment contract is created and when it later separates from the underlying asset. Statements about future functionality, milestones, timelines, personnel, funding, and expected holder benefits should therefore be drafted with exceptional care and tracked through completion or abandonment disclosures. Additionally, the Release's recognition that a crypto asset may later separate from an investment contract does not eliminate potential liability arising from the original offering. Accordingly, issuers should not treat "separation" as curing an earlier failure to register the offering or satisfy an exemption, nor as eliminating potential anti-fraud exposure tied to pre-separation statements or omissions.

Trading Venues and Secondary Markets

The Release's separation framework may be particularly significant for trading venues, brokers, and other intermediaries evaluating secondary-market activity. Under the Release, the relevant question is not simply whether the asset itself is a non-security crypto asset, but also whether purchasers would still reasonably expect profits from issuer-attributable promises that remain connected to the asset. That places a premium on diligence regarding issuer communications, public milestone-completion disclosures, abandonment or non-performance disclosures, and whether any essential managerial efforts are ongoing. Listing analysis, therefore, should not be treated as one-and-done; for many assets, it should be revisited over time.

Third-Party Service Providers

One of the clearest practical beneficiaries of the Release is the category of providers of staking, wrapping, and related infrastructure services. Those providers now have a solidified framework for assessing whether their functions remain administrative or ministerial rather than managerial. At the same time, providers whose products involve discretion, guaranteed returns, asset reuse, or other features outside the Release's described fact patterns should not assume that the Release's conclusions apply to them.

Enforceability in Federal Courts

The Release explicitly positions itself as an interpretation rather than rulemaking. In light of the Supreme Court's decision in Loper Bright Enterprises v. Raimondo, 603 U.S. ___ (2024), courts are not required to defer to agency interpretations of ambiguous statutes, and interpretive releases such as the Release may be understood to carry persuasive rather than controlling authority in the context of civil litigation. Therefore, while following the Release could decrease the risk of SEC enforcement, [8] it does not necessarily insulate issuers from litigation exposure from the purchasers of the digital assets. Time will show whether the analytical framework of the Release will be followed by the federal courts.

State Law Compliance

Because the Release is interpretive and does not itself create new federal exemptions or safe harbors, market participants should not assume that it resolves separate state-law questions, including potential Blue Sky issues, or that state regulators will necessarily apply the same analytical approach. As a practical matter, state-law analysis should still be assessed separately where relevant.

Narrow Framework for Certain Activities

While providing directionally helpful guidance, the Release's facts and circumstances framework is at times narrow and may not answer all questions issuers and other market participants may have. For example, Release addresses certain airdrops where recipients do not provide any consideration in exchange. That contextually excludes not just monetary but any consideration, and it is not clear whether the purported "gifting" of tokens to recipients may be considered a sale of securities because of potential benefits generated by the issuers (for instance, by influencing consumers to use the platform services and increasing recognition and the value of the airdropped token). The Release also expressly declines to address restaking and conditions several staking and wrapping conclusions on the absence of discretion, guaranteed returns, and asset reuse. Market participants should therefore resist extrapolating the Release beyond the specific fact patterns.

[1] Chairman Paul S. Atkins openly characterized the "regulation-by-enforcement campaign" as "misguided" at the Practicing Law Institute on March 19, 2026. See Prepared Remarks Before SEC Speaks 2026.

[2] Compare, for instance, with 581 pages of SPAC-related final rules adopted on January 24, 2024.

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

[4] See Id. Notably, each element has been subject to numerous subsequent judicial interpretations, and the modern understanding of Howey, including the "from efforts of others" element, is shaped by those interpretations.

[5] In re Barkate, Release No. 34 49542, 2004 WL 762434, at *3 n.13 (Apr. 8, 2004).

[6] The primary focus of the Release in the context of the sale of a non-security asset in a transaction qualifying as an investment contract is the representations and promises of the issuer to engage in the managerial efforts and the nature of such promises. Notably, the SEC concludes that crypto assets cease to be subject to an investment contract transaction when it "separates from the issuer's representations or promises."

[7] The Release also makes clear that separation through failure or abandonment does not eliminate potential liability for the original offering or for material misstatements or omissions, including under the anti-fraud provisions.

[8] Even in the enforcement context, there remains a risk that future SEC leadership could rescind or substantially modify the interpretation set forth in the Release without engaging in Administrative Procedure Act rulemaking because of the interpretive nature of the Release.

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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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