SEC or CFTC? How US regulators now sort crypto tokens

The March 2026 SEC-CFTC interpretation set out five token categories. What it settles, what it leaves open, and why finance teams should care.

2026-10-17 · 4 min read

Since March 2026, US regulators have a published taxonomy for deciding whether a token is a security. It does not change your accounting by itself, but it affects which venues can list your tokens, how token sales are documented and which disclosures your lawyers will ask for.

The starting point: the Howey test

For decades the question has been whether a token, or the way it was sold, is an investment contract. In SEC v. W.J. Howey Co. (1946), the Supreme Court described one as a contract in which a person invests money in a common enterprise and expects profits from the efforts of a promoter or third party [1]. If a token sale meets that test, securities law applies and the SEC is the main regulator. If the token is not a security, it may be a commodity, where the CFTC has a role.

The SEC's own fact sheet acknowledges that, before 2025, it relied on Howey case by case and largely regulated through enforcement actions rather than a tailored framework [2].

What the March 2026 interpretation says

On 17 March 2026 the SEC issued a Commission interpretation of how the federal securities laws apply to crypto assets [3]. The CFTC joined it, saying it and its staff will administer the Commodity Exchange Act consistently with the interpretation, and that certain non-security crypto assets could meet the definition of a commodity [4]. The interpretation sorts tokens into five categories [2]:

The interpretation also explains how a token that is not itself a security can become subject to an investment contract: when an issuer sells it by inducing an investment with promises of essential managerial efforts from which buyers expect profits [2]. Importantly, it says that contract can end, either because the issuer delivered on its promises or because it failed to [2]. SEC Chairman Paul Atkins described this as recognising that investment contracts "can come to an end" [3].

Finally, the SEC stated that protocol mining, protocol staking and the wrapping of a non-security token, each as described in the interpretation, do not involve an offer and sale of a security, and that certain airdrops do not involve an investment of money under Howey [2].

What remains unsettled

An interpretation is guidance, not a statute. It can be revised by a future Commission and does not bind courts. Congress has not yet written a market structure framework into law: on 15 September 2026 the Senate fell short, 49 to 50, on a procedural vote to take up the CLARITY Act, and commentators now see passage in this Congress as unlikely [5].

Agencies are moving without Congress. On 17 September 2026 the SEC granted a five-year conditional exemption for venues trading tokenised versions of listed US stocks, and the CFTC sent a crypto rulemaking for White House review the same day; its text has not been published [6]. The CFTC's staff also broadened no-action relief for software providers that only pass users' orders to registered intermediaries [6]. The SEC has proposed exemptions from registration for some investment contracts involving crypto assets, but formal rules are still some way off [5].

State rules also still apply. Money transmitter licensing and state securities requirements continue to govern much spot trading and custody activity [5]. And the categories involve judgement: whether a network is functional, or whether an issuer's promises have been fulfilled, are facts that can be disputed.

Why it matters for finance teams

The securities label and the accounting label are separate questions. A token being a digital commodity does not, on its own, decide whether it is in scope of ASU 2023-08 fair value accounting, and a tokenised share is a security whatever chain it sits on. But the label drives practical matters: whether US exchanges will list or custody a token, how a token issuer documents sales and promises, and what risk factors and contingencies appear in financial statement disclosures.

For token issuers, the new framing makes the content of public promises about the network more important. Those statements are what can create, and later end, an investment contract.

What to do

• Ask counsel to map each token you hold or issue to one of the five categories, and keep the memo with your accounting policy file.
• If you issue a token, keep a dated record of public promises about development and when they were met; the interpretation ties investment contract status to them.
• Do not treat a regulatory category as an accounting conclusion; run your ASU 2023-08 scope assessment separately.
• Track the CFTC rulemaking and any SEC exemptions, as they may change where you can trade or custody tokens.
• Review disclosures for regulatory uncertainty, since the framework rests on guidance that could change.

Sources

1. Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 (1946) (Legal Information Institute, Cornell Law School)
2. Fact Sheet: Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets (SEC)
3. SEC Clarifies the Application of Federal Securities Laws to Crypto Assets (Press Release 2026-30) (SEC)
4. CFTC Joins SEC to Clarify the Application of Federal Securities Laws to Crypto Assets (CFTC)
5. The CLARITY Act Stalls in the Senate: What's Next for Digital Asset Regulation (Orrick)
6. Crypto Policy Tracker: CLARITY Act fails Senate vote; SEC issues tokenized stock innovation exemption; CFTC issues no-action relief for passive software providers (Paul Hastings)

General information for finance teams, current as of publication. Not legal, tax or accounting advice.

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