SEC-CFTC Issues New Crypto Guidance 2026

Earlier this month, the Securities and Exchange Commission and the Commodity Futures Trading Commission issued a joint interpretive release addressing the application of the federal securities laws to crypto assets. The release is the most comprehensive federal guidance the digital asset industry has received to date. While the interpretation is not binding law and remains subject to revision by future administrations, it provides substantial clarity on several questions that have vexed founders, counsel, and market participants for the better part of a decade.

This post summarizes the principal takeaways from the interpretation and identifies action items we recommend clients consider in light of the guidance. Nothing in this post constitutes legal advice, and clients should consult with counsel before making decisions based on the framework discussed below.

Background: Why This Guidance Matters

Holographic specimens in glass cubes representing crypto token taxonomy under SEC CFTC guidance

The federal securities laws enumerate certain categories of instruments, such as stocks and notes, as securities. For instruments that fall outside those named categories, courts apply the investment contract test first articulated in SEC v. W.J. Howey Co. An investment contract exists where there is (i) an investment of money, (ii) in a common enterprise, (iii) with an expectation of profit, (iv) derived from the essential managerial efforts of others.

Because the securities laws were enacted in the 1930s, no crypto asset is specifically enumerated as a security. For years, market participants have relied on Howey to evaluate each token and each transaction, often at significant expense. The prior administration took the position, through enforcement rather than rulemaking, that nearly all tokens were securities. The current joint interpretation represents a meaningful course correction and provides a structured framework for analysis.

A Token Is Not Automatically a Security

The interpretation confirms a foundational point that industry counsel have long maintained: a token, standing alone, is not necessarily a security merely because it was offered or sold as part of a transaction that qualifies as an investment contract. The agencies draw an analogy to the citrus groves in Howey itself, which were not securities even though the sale-and-servicing arrangement surrounding them was.

This distinction matters. It allows the threshold question to be framed correctly: the first inquiry is whether a particular transaction is an investment contract, not whether the token itself is inherently a security.

When Does an Investment Contract Exist? Four Factors to Evaluate Project Communications

Energy thread dissolving between two forms representing securities obligations detaching from crypto asset

The interpretation emphasizes that whether a transaction gives rise to an investment contract turns substantially on the representations made by the project, its agents, and its promoters. The agencies identify four factors that counsel should evaluate:

1. Who is making the statements

Statements made by the project itself, by officers and employees, or by key opinion leaders (KOLs) engaged by the project weigh in favor of investment contract status. Projects should review their KOL agreements and disclosure obligations and ensure that influencer and ambassador arrangements are appropriately structured.

2. When the statements are made

Statements made prior to a token generation event carry greater weight than statements made after. This has two important implications. First, pre-TGE communications require careful review. Second, the treatment of post-sale statements suggests that ongoing development updates in secondary markets are less likely to trigger investment contract status, which supports enhanced disclosure practices that reduce information asymmetry.

3. How the statements are made

Communications made through official project channels are given more weight than informal or individual statements. We recommend that every project maintain a written social media and external communications policy governing the conduct of employees, contractors, and ambassadors, and that a single individual be designated with approval authority over material communications.

4. What the statements say

Explicit statements linking project roadmaps, development milestones, or token price appreciation to the team’s managerial efforts weigh heavily in favor of investment contract status. Projects face a genuine tension here: vague communications reduce legal risk but frustrate users and erode trust. Counsel should work with the marketing and product teams to develop language that is accurate and informative without creating unintended indicia of an investment contract.

The Attachment Theory: Do Securities Rules Follow the Token?

Three-dimensional network of glowing nodes representing proof of stake consensus and staking

A central and long-debated question is whether, when a token is sold pursuant to an investment contract, the securities law obligations (for example, resale restrictions under Rule 144) attach to the token itself or remain limited to the investment contract. The interpretation adopts the view that securities law obligations attach to the underlying non-security crypto asset (NSCA) so long as the conditions giving rise to investment contract status continue to apply.

Under this framework, obligations fall away, and the token may trade freely, once purchasers can no longer reasonably rely on the promises of essential managerial efforts that induced the original purchase. The interpretation indicates that this separation can occur at any time after the investment contract is offered, provided the underlying conditions are met.

Practical considerations for counsel and clients:

The attachment framework is consistent with the policy objectives of the federal securities laws: it mitigates the risk that an insider captures the upside of an investment contract while shedding the associated investor protection obligations before retail investors can evaluate the risk.
The separation standard is fact-intensive. Clients should not assume that tokens acquired under an exemption are freely tradable on secondary markets absent legal analysis.
There is a reasonable argument that a minimum holding period, aligned with the one-year Rule 144 safe harbor, would reduce ambiguity and provide the market with a clearer rule. Counsel should monitor whether this approach is adopted in subsequent rulemaking or in the CLARITY Act framework.

Token Taxonomy: A New Framework

Two portals connected by golden arc representing 1:1 backed wrapped token bridge

The interpretation introduces a taxonomy of crypto assets that provides a useful structure for classification. Each category is summarized below.

Digital Commodities

Not securities. Digital commodities derive value from the programmatic operation of a functional crypto system and from market supply and demand, rather than from intrinsic economic rights. They must be necessary to participate in or use a crypto system. Tokens used in consensus mechanisms, network security, governance, and gas are likely digital commodities. The interpretation identifies BTC, ETH, SOL, DOGE, BCH, ADA, LINK, HBAR, LTC, DOT, XLM, AVA, APT, SHIB, XTZ, XRP, ALGO, and LBC as digital commodities.

The interpretation leaves some ambiguity regarding the phrase “crypto system,” which is defined as “crypto networks and crypto applications together.” Clients pursuing digital commodity status should engage counsel early to confirm that pre-TGE prerequisites are satisfied.

Digital Collectibles

Not securities. Collectibles have no intrinsic economic rights and are associated with art, music, game items, memes, and other cultural items. The interpretation clarifies that creator royalties do not convert a collectible into a security, that collection size is not determinative, and that memecoins generally derive value from supply and demand rather than from others’ essential managerial efforts. The interpretation also confirms that fractionalized collectibles and the mechanisms by which they are sold are likely to be securities or securities transactions, and that named collectible projects include CryptoPunks, Art Blocks Chromie Squiggles, dogwifhat, Chiliz fan tokens, and VCOIN.

Memecoin and NFT projects that have historically included revenue rights or yield-bearing features in their roadmaps should revisit their positioning in light of this guidance.

Digital Tools

Not securities. Digital tools perform practical functions such as membership access, ticketing, credentials, and title instruments. Soul-bound tokens may fall within this category. The interpretation emphasizes consumptive use and the absence of intrinsic economic rights. Named examples include ENS and the CoinDesk Microcosms NFT consensus ticket.

Stablecoins

Payment stablecoins issued by permitted payment stablecoin issuers are not securities. For other stablecoins, the analysis returns to the question of whether an investment contract exists. The offer and sale of “covered stablecoins” as defined in the SEC’s April 4, 2025, Statement are not securities transactions. Issuers and parties providing white-label stablecoin services should confirm their structures remain consistent with current guidance.

Digital Securities

Securities. Digital securities are instruments that are defined as securities under the Securities Act of 1933 and the Securities Exchange Act of 1934 and are issued or traded on-chain. The interpretation cautions that the rights embedded in a tokenized security may not fully correspond to those associated with the underlying security, and that investors should exercise due diligence accordingly.

Proof of Work, Proof of Stake, and Staking Activities

The interpretation provides meaningful clarity for consensus and stakeholder participants. Mining as part of a proof-of-work consensus mechanism, including solo mining and most mining pool arrangements, does not give rise to an investment contract. Self-staking, custodial staking, liquid staking, and other covered staking activities are similarly outside the scope of investment contract status, provided the specified parameters are satisfied.

Despite this general clarity, staking programs vary considerably in structure, and clients operating validator services, staking-as-a-service offerings, or liquid staking protocols should consult counsel to confirm that program terms and disclosures align with the safe-harbor parameters.

Cross-Chain Bridges

The interpretation’s treatment of cross-chain bridges is among its most useful contributions. The agencies confirm that the wrapping and unwrapping processes (custody of deposits, issuance of wrapped tokens, and subsequent burn-and-release) do not constitute investment contracts. Wrapped tokens are not derivative instruments, and bridge terms of service may be structured in a manner consistent with the guidance.

Critically, the interpretation provides that wrapped tokens should be backed and redeemable on a fixed 1:1 basis. Bridge operators should confirm that their reserve and redemption mechanics align with this expectation, given that bridges represent concentrated risk points and rehypothecation materially amplifies the consequences of any breach.

Airdrops

The interpretation addresses a question that has long divided the industry: whether airdrops should be geofenced to exclude the United States as a recipient. The guidance indicates that airdrops generally avoid investment contract status and thus generally do not implicate securities laws when distributed in the United States, where recipients do not provide consideration in exchange for the tokens received.

The analysis turns on two factors:

Airdrop Communications

General statements regarding the possibility of an airdrop that do not include specific terms and conditions are generally acceptable. Communications that tell users what they must do to receive an airdrop, however, introduce investment contract risk. This applies equally to communications by project teams and by KOLs or ambassadors acting on a project’s behalf.

Recipient Activities

Activities undertaken by users in ignorance of airdrop eligibility are generally acceptable. For example, rewarding users for historical activity that occurred prior to any airdrop announcement is unlikely to give rise to investment contract status.

We recommend that any client contemplating an airdrop, points program, or similar distribution engage counsel well before any external communications, including community hints or partner outreach. Many of the risks in this area stem from pre-launch marketing content that is difficult to unwind once it is released.

Action Items for Issuers and Founders

Gold tokens descending through cyberspace representing compliant crypto airdrop distribution

Based on the interpretation, we recommend that clients consider the following:

Review all KOL, ambassador, and influencer agreements to confirm that scope-of-work, disclosure, and approval provisions align with the four-factor framework.
Audit pre-TGE communications, including whitepapers, websites, social content, and Discord and Telegram statements, and establish a written approval workflow for material communications going forward.
Reassess roadmap and development communications to balance legal risk against user transparency, recognizing that both over-promising and excessive vagueness carry real costs.
For tokens distributed pursuant to an exemption, confirm with counsel whether and when investment contract obligations have separated from the underlying asset before permitting secondary trading.
For staking programs, confirm that structural parameters fall within the guidance’s safe harbor.
For bridge operators, confirm 1:1 backing and redemption mechanics and review terms of service in light of the interpretation.
For airdrop programs, obtain legal review before any public communication regarding eligibility, mechanics, or timing.

Conclusion

Holographic interface with glowing markers representing crypto compliance action items

The joint interpretation is the most substantive federal guidance the digital asset industry has received to date. It does not resolve every open question, and it remains subject to revision. Nonetheless, it offers a workable framework that reflects good-faith engagement between federal regulators and the industry, and it provides founders and issuers with the clarity needed to make informed compliance decisions.

Clients with questions about how the interpretation applies to their projects, including token launches, secondary trading, staking programs, bridge operations, and airdrop design, are encouraged to contact our digital assets practice.

Legal References

Primary Guidance

SEC and CFTC, Joint Staff Interpretation on the Application of the Federal Securities Laws to Crypto Assets (2026). SEC Press Release No. 2026-30.
SEC, Statement on Stablecoins (April 4, 2025) (covered stablecoins).

Statutes

Securities Act of 1933, 15 U.S.C. §§ 77a et seq.
Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq.
Commodity Exchange Act, 7 U.S.C. §§ 1 et seq.

Regulations

17 C.F.R. § 230.144 (Rule 144, safe harbor for resales of restricted securities).
17 C.F.R. § 230.501 et seq. (Regulation D, exemptions from registration).

Case Law

SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (the four-factor investment contract test).
International Brotherhood of Teamsters v. Daniel, 439 U.S. 551 (1979) (characteristics of a security and separable interests).

Pending Legislation

The Digital Asset Market Clarity Act (CLARITY) addresses the jurisdictional allocation between the SEC and the CFTC and the definition of control for purposes of digital asset classification.

Selected Commentary

Miles Jennings, a16z Crypto, Defining Decentralization: Control, available at a16zcrypto.com.

Disclaimer: This post is for informational purposes only and does not constitute legal advice. The content reflects developments as of its publication date and may not reflect subsequent changes in law, regulation, or regulatory guidance. Readers should not act or refrain from acting on the basis of any information in this post without seeking advice from qualified counsel. Transmission of, or receipt of, this information does not create an attorney-client relationship between the reader and Hodder Law.