TL;DR: 

• On 17 March 2026, the SEC released a 68-page official interpretation clarifying the application of U.S. federal securities laws to crypto assets and transactions involving crypto assets (the “Interpretation”).
• The Interpretation provides a comprehensive token taxonomy framework, distinguishes between the regulatory classification of crypto assets themselves and that of the transactions involving crypto assets, and provides explicit regulatory guidance regarding PoW mining, PoS staking, wrapping and airdrops. 
• Throughout the Interpretation, the SEC clearly distinguishes between actions or activities performed “in a programmatic manner through self-executing computer code without reliance on any third-party intermediaries” and actions performed in a manual manner and/or through intermediaries.
• The Interpretation leaves certain key areas uncovered, presenting a few gaps that would be helpful for the regulator to specifically address as a next step. 
• While the Interpretation is merely regulatory guidance that may be amended or modified in the future (as a result, for example, of legislative measures, administration changes or SEC leadership changes), it is clearly a step in the right direction and provides a tremendous amount of new regulatory clarity for crypto asset market participants on multiple critical fronts, and will certainly bring renewed optimism to the broader crypto industry at a time when it needed it the most. 

Introduction

On 17 March 2026, the SEC, with endorsement from the CFTC, released a 68-page official interpretation clarifying the application of U.S. federal securities laws to crypto assets and transactions involving crypto assets (the “Interpretation”). 

The SEC’s Interpretation, among other things:

• Provides a token taxonomy framework for crypto assets, classifying them into five (5) distinct categories: Digital Commodities, Digital Collectibles, Digital Tools, Stablecoins, and Digital Securities.
• Addresses how a crypto asset that itself is not a security may become subject to, and how it may cease to be subject to, an investment contract under U.S. federal securities laws. 
• Clarifies the application of federal securities laws to proof-of-work (PoW) mining, proof-of-stake (PoS) staking, the wrapping of non-security crypto assets, and airdrops.

In this post, the dYdX Foundation summarises the most important takeaways from the SEC’s Interpretation, mentions a few aspects that are not explicitly covered in the Interpretation, and shares its opinion on the Interpretation and its potential impact on the crypto industry. 

Key Takeaways

Token Taxonomy

The first major contribution from the Interpretation is that it provides a comprehensive token taxonomy framework whereby crypto assets are classified into five (5) distinct categories, based on their characteristics, uses, and functions:

• Digital Commodities: the SEC defines Digital Commodities as crypto assets that are intrinsically linked to, and derive their value from, the programmatic operation of a crypto system that is functional, as well as supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others.  Crypto assets that offer passive yield or income rights would not qualify as Digital Commodities.  In practical terms, Digital Commodities include most Layer-1 network tokens in decentralised, public, permissionless blockchain networks, and many protocol governance and staking tokens.  Examples of Digital Commodities are BTC and ETH, among many others cited in the Interpretation. 
• Digital Collectibles: the SEC defines a Digital Collectible as a crypto asset that is designed to be collected and/or used and may represent or convey rights to artwork, music, videos, trading cards, in-game items, or digital representations or references to internet memes, characters, current events, or trends, among other things.  Crypto assets that provide income rights would not qualify as Digital Collectibles.  Additionally, the SEC clarified that the existence of creator royalties does not in itself turn crypto asset collectibles into securities.  In practical terms, Digital Collectibles should include most non-fungible tokens (NFTs) and memecoins, among other types of typical crypto assets.  The SEC does clarify, though, that the fractionalisation of Digital Collectibles may turn the fractions created (and/or the potential transactions in which they are involved) into securities.  
• Digital Tools: the SEC defines a Digital Tool as a crypto asset that performs a practical function, such as a membership, ticket, credential, title instrument, or identity badge.  In practical terms, Digital Tools capture access tokens, soul-bound tokens, and name service tokens (such as ENS), among others. 
• Stablecoins: in the matter of stablecoins, the SEC simply refers to the recently-passed GENIUS Act and clarifies that payment stablecoins that comply with it shall not be regarded as securities under U.S. federal securities laws.  It is the SEC’s view that yield-bearing and algorithmic stablecoins require an ad hoc regulatory analysis. 
• Digital Securities: lastly, the SEC defines Digital Securities as financial instruments enumerated in the definition of “security” that are 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.  In practical terms, Digital Securities capture any securities in tokenised format.  This is a clear example of an approach based on the classical ‘substance over form’ regulatory principle.  

In the Interpretation, the SEC clarifies that Digital Commodities, Digital Collectibles and Digital Tools are not themselves securities.  However, the SEC also clarifies that non-security crypto assets may become part of a transaction that is deemed an investment contract, or cease to be part of a transaction that is deemed an investment contract, and hence may become subject to, or cease to be subject to (respectively), U.S. federal securities laws.  In other words, the classification of a crypto asset itself does not predetermine the regulatory classification of transactions involving that crypto asset.  Therefore, the SEC recognises that a non-security crypto asset can become subject to an investment contract if sold with promises of ‘essential managerial efforts’, and provides additional guidance (including specific practical examples) around when an investment contract exists and how it may cease to exist.  For example, the SEC accepts that an investment contract may cease to exist when the promises made by the issuer regarding ‘essential managerial efforts’ have been fulfilled (i.e., the issuer has completed all promised efforts and publicly discloses this) or abandoned (i.e., the issuer publicly and clearly announces it will not perform the promised efforts and is therefore abandoning the project).  There are some key practical implications derived from this doctrine:

• The investment contract test is issuer-specific, based on the actual promises made by the issuer.  The how, when and where of the promises matter and can be decisive. 
• Post-sale representations do not retroactively create an investment contract on prior sales.
• Vague or abstract promises can be more dangerous than concrete ones, since they may not have a natural or obvious completion point. 
• Projects should plan and record every promise made, set clear and transparent completion criteria, and announce publicly and loudly when the promises are completed or abandoned. 

Interestingly, the SEC acknowledges that the taxonomy framework is not exhaustive and that there may be crypto assets that fall outside of the five categories mentioned in the framework, as well as hybrid crypto assets which fall within more than only one category.  In addition, the classification of crypto assets is a fluid one, with classifications for a given crypto asset potentially changing over time as the characteristics, uses, and functions of such crypto asset evolve (for example, a memecoin could evolve into a digital commodity). 

Mining & Staking

Another crucial contribution from the SEC’s Interpretation is that mining on public, permissionless, PoW networks, and staking on public, permissionless, PoS networks, do not involve the offer or sale of securities.  Both self (or ‘solo’) mining and mining through a mining pool, as well as all of self (or ‘solo’) staking, self-custodial staking directly with a third party, custodial staking, and liquid staking are covered in the Interpretation. 

This conclusion has major implications for PoW miners, mining pool operators, PoS validators and node operators, custodians, and liquid staking providers (LSPs) operating on, or providing services related to, public, permissionless blockchain networks. 

Wrapping

Wrapping is defined by the SEC as the offer or sale of a redeemable wrapped token that is a receipt for a non-security crypto asset that is not subject to an investment contract.  In the Interpretation, the SEC explicitly clarifies that wrapping, on those terms, does not involve the offer or sale of securities. 

This conclusion has major implications for bridge operators and interoperability protocols deployed on public, permissionless blockchain networks. 

Airdrops

The Interpretation limits its scope in the matter of airdrops to “airdrops of non-security crypto assets by issuers to recipients who do not provide the issuer with money, goods, services, or other consideration in exchange for the airdropped non-security crypto assets”.  These airdrops shall, in the SEC’s opinion, not be considered investment contracts or securities under the Howey test or U.S. federal securities laws, primarily because there is no investment of money.  

No kind of consideration is allowed from airdrop recipients to the token issuer in order for an airdrop to benefit from this interpretation.  However, where a consideration was provided to the issuer prior to the announcement of the airdrop and the recipients are not required to provide any further consideration to the issuer after such announcement in order to obtain the airdropped non-security crypto asset, the SEC does not view such consideration as being provided to the issuer in exchange for the airdropped non-security crypto asset, and therefore the airdrop may benefit from this interpretation.  

The Interpretation explicitly mentions airdrops in favour of (a) holders of other crypto assets, (b) testnet users or participants, and (c) users of a related software application, as covered airdrops that may benefit from the SEC’s interpretation, as long as the airdrop was not announced or promised in any way prior to being effectuated.

Other Aspects 

While not explicitly discussed in the Interpretation, it is also worth noting that, throughout the released document, the SEC clearly distinguishes between actions or activities performed “in a programmatic manner through self-executing computer code without reliance on any third-party intermediaries” and actions performed in a manual manner and/or through intermediaries, clearly implying and recognising that the two are not the same and that the latter may be subject to certain regulatory requirements and obligations, depending on the circumstances.

Potential Gaps 

While the Interpretation is very comprehensive and explicit on a number of crucial matters specific to the crypto space, there are a few areas and topics that are not explicitly covered or discussed in the Interpretation that would be very helpful for the SEC to consider and issue express guidance and clarifications on:

• Digital Commodities: the Interpretation does not specifically clarify whether crypto assets receiving protocol fee distributions governed by decentralised governance systems should be classified as Digital Commodities or Digital Securities.  This is a crucial gap that requires urgent individualised attention and clarification from the regulator.  
• Staking: the Interpretation covers staking of crypto assets in PoS blockchain systems, but it does not expressly address the staking of application tokens that may be protocol staking and/or governance tokens but not PoS network tokens (i.e., the staking of application crypto assets that are not Layer-1 PoS network tokens).
• Wrapping: the SEC’s interpretations on wrapping cover only the issuance and redemption of ‘Redeemable Wrapped Tokens’, but not one-way crypto asset bridges through which a crypto asset can be permanently and irrevocably converted into a different asset, with no redemption functionality.  Although this may be intentional on the SEC’s side, having additional regulatory clarity on this matter would be extremely helpful. 

Conclusion 

The SEC’s recent public release clarifying the application of U.S. federal securities laws to crypto assets and crypto asset transactions provides a tremendous amount of new regulatory clarity for crypto asset market participants on multiple critical fronts, as discussed throughout this post. 

While the Interpretation has certain gaps and leaves a few crucial topics outside of its scope, it is extremely detailed, explicit and practical.  It will certainly provide crypto asset market participants with a renewed dose of regulatory confidence and empowerment, and bring renewed optimism to the broader crypto industry, at a time when crypto market sentiment has not precisely been at its peak for a while.  

It is important to note that the Interpretation is just the current SEC’s interpretation of how U.S. federal securities laws should be applied to crypto assets and crypto asset transactions. It is not a binding law or regulation.  In fact, the guidance in the Interpretation may need to be nuanced or modified by the SEC following the eventual approval of a federal law governing crypto markets (such as the Clarity Act, which is currently under review by the U.S. Congress and Senate).  Moreover, the Interpretation is not necessarily binding for the SEC and it may be totally or partially reversed or modified by the supervisor in the future (for example, following a change in administration and/or a change in SEC leadership).  The Clarity Act (or the crypto market structure legislation that ends up being approved in the U.S.) will be the truly transformational and impactful regulatory development that provides legal clarity to crypto asset market participants in the U.S. once and for all.  

All in all, we believe that the release of the Interpretation by the SEC is undoubtedly a step in the right direction.  It provides a breeze of fresh regulatory air to an industry that desperately needed it, at a time when it was most needed.  If this public guidance release is followed by additional constructive regulatory steps by the SEC and the CFTC and, crucially, by the congressional approval of crypto market structure legislation, we could see crypto entering its true golden era. 

At dYdX Foundation, we sincerely welcome initiatives like this from the SEC and the CFTC, and encourage other regulatory bodies to consider taking similar steps towards providing regulatory clarity to crypto asset market participants.  

Disclaimer

This post contains only a high-level summary of the main points and takeaways from the SEC’s Interpretation, not a detailed analysis of the content and implications of the Interpretation. The post is based on the dYdX Foundation’s good-faith assessment of the Interpretation. Nothing in this post should be construed or used as legal advice or any other form of professional advice. Readers are highly encouraged to review the SEC Interpretation in full.