Crypto asset investors and issuers alike have long sought greater clarification on questions surrounding the actual or potential applicability of the federal securities laws to digital assets. SEC Chair Paul Atkins previously declared his intent to provide relevant guidance. Now, the SEC, acting in conjunction with the Commodities Futures Trading Commission, has issued detailed guidance segmenting digital assets between those to which the securities laws apply and those to which the laws do not apply, as well as clarifying under what circumstances digital assets can become subject to the securities laws. The agencies’ clarifications will provide significant illumination for investors and issuers, and at least potentially for D&O insurance underwriters as well.

The SEC’s March 17, 2026, press release about the new digital assets guidance can be found here. The SEC’s March 17, 2026, Interpretive Guidance can be found here. The SEC’s March 17, 2026, Fact Sheet about the new Guidance can be found here.

Background

Digital assets such as cryptocurrencies are of course not new. They have been part of the financial scene for over a decade. Up until now, the SEC, as well as digital asset issuers and investors, have generally looked to the standards the U.S. Supreme Court described in its 1946 decision SEC v. W.J. Howey to determine whether or not cryptocurrencies and other digital assets, as well as transactions in those assets, are subject to the federal securities laws.

Applying the Howey test to digital assets has proven to be a contentious, fact-intensive process, arguably resulting in significant legal ambiguity. Moreover, the application of the Howey test within individual enforcement actions has led to criticism of the SEC — under the prior administration — for engaging “regulation by enforcement.”

Because of concerns about the regulatory approach the government has taken toward digital assets in the past, as well as public input provided to the SEC’s Crypto Task Force, the agency has now issued the updated guidance on digital assets and the securities laws.

The Agencies’ Interpretive Guidance

The interpretation set out in the guidance is, according to the SEC’s Fact Sheet about the guidance, intended to provide “greater clarity regarding the Commission’s treatment of crypto assets and complements Congressional efforts to codify comprehensive crypto market structure framework into statute.”

The key to the new guidance is the “framework” the document uses, described in the document as a “token taxonomy.” The document categorizes digital assets into five groups: digital commodities; digital collectibles; digital tools; stablecoins; and digital securities. The meaning of the titles of each of the five categories is described in the SEC’s Fact Sheet. Stablecoins, which maintain a consistent value, often at one dollar because the value is fully backed by currency or equivalents,  are already carved out from the securities laws by the GENIUS Act, which was enacted last summer.

The guidance document specifies that in the agencies’ view, most crypto assets are not themselves securities – of the five categories in the taxonomy, only the category denominated as “digital securities” are, according to the guidance document, subject to the federal securities laws.

Importantly, a non-security digital asset can become subject to the securities laws if it is offered or promoted in a way that constitutes an investment contract – for example, when purchasers are led to expect profits based on the issuer’s managerial or entrepreneurial efforts. The agency’s guidance provides clarification on how a non-security asset can become subject to an investment contract and also provides clarification of how a non-security crypto asset ceases to be subject to an investment contract.

The agency’s guidance document also provides interpretation of several kinds of crypto-adjacent activities that previously fell into regulatory grey areas. Among other things, the document clarifies when an airdrop may trigger securities law obligations. (In general, the agency’s position is that airdrops do not involve an “investment of money” under the Howey standards.) The document also confirms that protocol mining and staking  and wrapping do not constitute securities transactions.

In addition to the agency’s release of the crypto asset guidance, the SEC’s Chair, Paul Atkins, in a March 17, 2026, speech at the DC Blockchain summit, also announced other SEC digital asset initiatives.

Among other things, Atkins identified several digital asset  “safe harbors” that the agency hopes to be announcing in coming months, including a “startup exemption,” providing a time-limited registration exemption for crypto asset contract offerings; a “fundraising exemption,” with a high fundraising ceiling during a specified period, with more extensive disclosure requirements; and a safe harbor from the definition of security, that would apply once an issuer has fulfilled all the obligations it made under its investment contract offering, with the objective of giving greater certainty about when a crypto asset is not subject any longer to the federal securities laws.”

Discussion

The SEC’s new crypto asset guidance is intended to provide clarity for crypto asset issuers and investors. Among other things, the guidance seeks to provide clarity on whether certain crypto assets are securities (although I question whether this clarity is the same as certainty, as discussed below). The guidance also provides clarity around certain common crypto adjacent activities, such as airdrops, staking, and crypto asset wrapping. The agency’s clarification about when a non-security crypto asset can become a security may be particularly welcome for certain crypto issuers.

The clarity around classifications between and among various digital asset classes could provide lower compliance risks (and costs) for issuers and a more predictable trading environment, which would be a benefit both for issuers and investors.

It will be interesting, to me at least, to see what D&O insurance underwriters make of these changes. Crypto assets and crypto asset firms have, in general, and for most insurers, been somewhere between a disfavored class of business and a no-fly zone. In part, this has been because of the lack of clarity around the applicability of the securities laws. Some carriers, or at least some opportunistic carriers, may see the new guidelines as the signal to get into a class of business that still carries outsized premiums.

Although the new guidelines represent a creditable attempt to provide clarity for a context in which there has in the past been little, I wonder whether the new guidelines will reduce the risks of regulatory disputes or merely shift the battle lines. For example, whether or not the securities laws apply still depend on how the digital assets in question are categorized. I could easily see disputes arising whether any given digital asset is “digital security” to which the securities laws apply or is a non-security crypto asset to which the securities apply.

Another question in the wake of the issuance of the guidance is the legal significance of the agencies’ guidance. For example, if a subsequent private litigant takes the position that the securities laws apply to the issuance or trading of a particular digital asset, will the court look to the SEC’s guidance, or will it rather go back to interpreting the applicability the Howey test, regardless of what the SEC has said that its own enforcement policy should be?  What legal effect does/should the agencies’ guidance have? (Side note: I understand that the SEC will in the near future submit a proposed rule for public comment, meaning that the guidance could be upgraded to an agency rule, which clearly could upgrade the significance of the agency’s stance on these issues.)  

Then there is the question of whether all of this represents good policy. From the perspective of investor protection, should the SEC be taking what can only be described as a hands-off approach to digital assets? (Side note: I think the policy debate arguably is different with respect to stablecoins than with respect to the other classes of digital assets.)

With respect to the policy question, it is relevant to note that this development – that is, the SEC’s issuance of this kind of guidance regarding digital assets — was both predictable and consistent with the current Trump administration’s overall policy on crypto generally. Indeed, on January 23, 2025 (that is, just days after President Trump’s second inauguration), the White House issued Executive Order 14067, which, among other things, said that it was the administration’s goal to make the U.S. the “crypto capital of the world,” by promoting deregulation. (For a more detailed look at the current Trump administration and crypto assets, please refer here.)

As you consider the policy question, it is worth keeping in mind that crypto and digital asset companies, through their political action committee, made political contributions of $245 million during the 2024 elections. And some might also consider it relevant to note that prior to his confirmation as SEC Chair in 2025, Atkins served as CEO of Patomak Global Partners, a role in which he advised, among others, digital asset companies on regulatory strategy and crypto asset policy, and he also served as Co-Chairman of the Digital Chamber’s Token Alliance starting in 2017.

So, again, looked at from the perspective of investor protection, is all of this good policy?