Most Tokens Dodge Securities Label
On Tuesday, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly clarified that the majority of crypto assets—including Bitcoin mining rewards, staking payouts, and airdrops—will not be considered securities under federal law. SEC Chair Paul Atkins made the announcement at the DC Blockchain Summit in Washington, DC, marking a significant shift from previous regulatory ambiguity. As of June 11, only one category—tokenized versions of traditional securities—remains under direct SEC oversight.
The agencies’ new interpretative notice divides digital assets into five specific groups: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. Most protocol tokens now fall under either digital commodities or tools, placing them largely within CFTC jurisdiction rather than the SEC’s. This taxonomy also means that most NFTs and meme coins are classified as digital collectibles, outside the SEC’s purview.
On paper, this reclassification promises clarity for developers and investors; in practice, some asset types may still face legal uncertainty as rules evolve.
“Safe Harbor” Aims for Startup Relief
SEC Chair Atkins proposed a “safe harbor” framework designed to give crypto startups breathing room during their early years. The plan includes a “startup exemption” allowing companies to raise up to $5 million or operate for four years with regulatory flexibility. Additionally, a “fundraising exemption” would let entrepreneurs raise up to $75 million through crypto investment contracts within any twelve-month period without triggering full securities registration requirements.
Atkins expects draft rules for these exemptions to be released for public comment in the coming weeks.
These proposals aim to address long-standing complaints about regulatory uncertainty stifling innovation in the U.S. crypto sector. Under previous leadership, the SEC’s reliance on the Howey Test—a decades-old legal standard—was criticized by Atkins as a “persistent failure to provide clarity.” Now, with concrete thresholds and timelines, startups may soon have clearer guardrails as they build new blockchain projects.
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Token Taxonomy Clarifies Legal Landscape
The SEC’s guidance provides a detailed taxonomy that sorts tokens into five categories: digital commodities (like Bitcoin), digital collectibles (such as most NFTs), digital tools (utility tokens), stablecoins (pegged to fiat currencies), and digital securities (tokenized stocks or bonds). According to decrypt.co, only tokenized versions of traditional securities will remain subject to SEC regulation as securities; all other categories are excluded from this classification under the new interpretation.
For example, protocol mining on networks like Bitcoin and Ethereum is now explicitly not considered a security activity. Similarly, staking rewards—where users lock up tokens to support network operations—and airdrops—free distributions of tokens—are outside the scope of securities laws per Tuesday’s announcement. This marks a departure from prior years when such activities risked falling into regulatory gray areas.
Why It Matters: Practical Impact for Crypto Builders
For founders and investors navigating U.S. regulations, these changes could dramatically alter compliance costs and legal risks. Startups raising less than $5 million or operating within their first four years may soon avoid costly registration processes entirely if the safe harbor proposal is adopted. Entrepreneurs seeking larger rounds—up to $75 million annually via crypto investment contracts—would also benefit from clearer exemptions.
The CFTC has indicated it will administer its own Commodity Exchange Act consistently with these new SEC guidelines. This coordinated approach is intended to prevent overlapping enforcement actions and streamline oversight across markets valued in the hundreds of billions of dollars. However, there is still uncertainty around certain hybrid products or wrapped assets that do not fit neatly into one category.
Investors now have firmer ground for evaluating whether an asset falls under securities law—but must remain alert as final rules are still pending public comment.
Only Tokenized Securities Face Oversight
Despite broad exemptions announced on June 11, tokenized versions of stocks and bonds remain firmly within SEC jurisdiction. The agencies’ joint memorandum clarifies that these assets are treated identically to their traditional counterparts under federal law. As such, issuers of tokenized securities must comply fully with existing disclosure and registration requirements.
Meanwhile, enforcement priorities may shift following Monday’s resignation of SEC enforcement division director Margaret Ryan; Sam Waldon has been named acting director during this transition period. The timing coincides with ongoing debate in Congress over the stalled CLARITY Act—which had aimed to codify similar distinctions into statute but has yet to advance out of committee.
For now, most crypto projects can proceed without fear of immediate SEC action—as long as they steer clear of tokenizing traditional financial instruments.
What the market will watch
If the SEC releases its proposed safe harbor rules for crypto exemptions as expected in the coming weeks, immediate attention will focus on whether the startup exemption covers companies raising under $5 million in their first four years and if the fundraising exemption allows up to $75 million via crypto investment contracts, as these thresholds would determine which projects can operate with regulatory flexibility right away.