SEC's Crypto Framework: The New Token Taxonomy

Key Takeaways

• The SEC issued a formal interpretation of the definition of "security" as applied to certain types of crypto assets and activities involving crypto assets. The CFTC joined the interpretation to provide complementary guidance under the Commodity Exchange Act.¹ This interpretation supersedes the 2019 "Framework for 'Investment Contract' Analysis of Digital Assets" previously issued by the staff of the SEC's Strategic Hub for Innovation and Financial Technology (staff of the SEC, the "Staff").
• The Interpretive Release classifies crypto assets into five categories: (i) Digital Commodities (not securities); (ii) Digital Collectibles (not securities); (iii) Digital Tools (not securities); (iv) Stablecoins (GENIUS Act payment stablecoins and certain "covered stablecoins" not securities); and (v) Digital Securities / tokenized securities (securities), while noting that even a non-security crypto asset may be offered as part of an investment contract and thus be subject to