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# SEC Declares Most Crypto Assets Fall Outside Securities Law
- URL: https://www.theglobalbanker.com/sec-declares-most-crypto-assets-fall-outside-securities-law/
- Published: 2026-03-19T04:10:11.000Z
- Updated: 2026-10-01T21:27:31.000Z
- Description: At the centre of the new framework is the SEC's definition of a digital commodity, which evaluates whether a digital asset derives its value from programmatic operations within a blockchain network rather than from the managerial efforts of third parties.
- Author: TGB Editorial Team
- Tags: Regulations, Americas

The Securities and Exchange Commission issued an interpretation on Tuesday clarifying how the federal securities laws apply to crypto assets, with Chairman Paul Atkins saying it acknowledges that most crypto assets are not themselves securities. The Commodity Futures Trading Commission joined the interpretation, saying it and its staff will administer the Commodity Exchange Act consistently with it.

#### THE FUNCTIONAL CRYPTO STANDARD

At the centre of the new framework is the SEC's definition of a digital commodity, which evaluates whether a digital asset derives its value from programmatic operations within a blockchain network rather than from the managerial efforts of third parties. Under this test, tokens that operate within functional networks and whose value stems from supply-and-demand dynamics rather than entrepreneurial expectations are classified as digital commodities, placing them beyond the reach of federal securities laws.

The interpretation names major cryptocurrencies including Bitcoin and Ether among the digital commodities that are not securities. It also states that protocol mining, protocol staking and the wrapping of a non-security crypto asset do not involve the offer and sale of a security, and that certain airdrops do not involve an "investment of money" under the Howey test.

"After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws," SEC Chairman Paul Atkins said in the announcement. "It also acknowledges what the former administration refused to recognise — that most crypto assets are not themselves securities."

#### WHAT IT MEANS FOR BANKS

Over the past year, a wave of financial institutions and fintech firms have filed applications with the Office of the Comptroller of the Currency for national trust bank charters focused on crypto custody and stablecoin operations. Eleven companies filed for or won OCC trust charters in the 83 days to 5 March, including Morgan Stanley, Stripe subsidiary Bridge, Crypto.com, and Payoneer. The OCC has issued several conditional approvals and has finalised a rule change, effective April 1, that broadens the permissible activities of national trust banks to explicitly include non-fiduciary custody.

The American Bankers Association had already raised alarms about pending crypto market structure legislation that could allow stablecoin holders to earn yield, while Standard Chartered analysts estimated in January that stablecoins could draw about $500 billion of deposits out of US banks by 2028.

#### INDUSTRY PUSHBACK CONTINUES

In early March, talks on the crypto market structure bill known as the CLARITY Act stalled as banks and the White House clashed over whether stablecoin holders should be allowed to earn yield. Separately, the Conference of State Bank Supervisors has described the OCC's crypto trust-charter structure as a "Franken-charter".

The SEC also set out how a non-security crypto asset becomes subject to an investment contract — when an issuer offers it with representations or promises to undertake essential managerial efforts from which purchasers would reasonably expect profits — and how that contract can later end. The interpretation will be published in the Federal Register; the SEC said it complements Congressional efforts to codify a comprehensive market structure framework into statute.