The Securities and Exchange Commission moved to settle long‑running questions about when crypto assets fall under federal securities rules, issuing an interpretation that maps out a token taxonomy and draws sharper jurisdictional lines with the Commodity Futures Trading Commission.
The joint move with the CFTC, announced Tuesday, comes as institutional investors say regulatory clarity is both the main catalyst and the biggest barrier for digital asset adoption. In a new survey from Coinbase and EY-Parthenon, 66% of respondents cited an “uncertain regulatory environment” as a primary concern when investing in digital assets, even as 73% plan to boost allocations this year.
Just last week, the SEC and the CFTC unveiled an agreement to create better coordination following "regulatory turf wars" around crypto products and prediction markets.
For advisors, the newly issued interpretation offers more detail on how different types of tokens will be treated and when an investment contract begins and ends – issues that sit at the core of product due diligence, disclosure, and compliance.
The Commission’s framework sorts crypto assets into several buckets, including digital commodities, digital collectibles, digital tools, stablecoins covered by the GENIUS Act, and tokenized versions of traditional securities.
Digital commodities are described as crypto assets whose value is tied to the “programmatic operation of a crypto system” and market supply‑and‑demand, rather than an expectation of profit from a management team. Digital collectibles and digital tools are also treated as non‑securities, while “digital securities” are essentially traditional securities that are represented on a blockchain.
The interpretation also tackles a key gray area for markets: when a crypto token that is not itself a security is being sold as part of an investment contract. The SEC outlines how a non‑security crypto asset can become subject to an investment contract when it is offered in a way that induces an investment of money in a common enterprise with promises of managerial efforts that purchasers reasonably expect will generate profits. It also explains when that relationship can end – either when the issuer delivers on those promises or fails to do so and the contract terminates.
On several contentious practices, the Commission said protocol mining, protocol staking and wrapping a non‑security crypto asset do not involve an offer and sale of a security, and that some airdrops do not involve an “investment of money” under the Howey test. That clarification is likely to matter for advisors evaluating how crypto exposure is being obtained inside funds, separately managed accounts, and other structures.
SEC Chairman Paul S. Atkins framed the move as overdue line‑drawing from the agency. He said the interpretation will give market participants “a clear understanding of how the Commission treats crypto assets under federal securities laws” and that it “reflects the reality that investment contracts can come to an end.”
The timing aligns with growing institutional interest in digital assets — and heightened scrutiny of market structure. In the Coinbase/EY survey of 351 global institutional decision‑makers, 78% said crypto market structure is the area most in need of additional regulatory clarity, and 61% expect tokenization to have a significant impact on trading, clearing and settlement over the next three to five years.
At the same time, the way firms access crypto is shifting toward regulated wrappers. Two‑thirds of surveyed digital asset investors reported using spot crypto ETFs and ETPs for exposure, while 81% said they prefer spot exposure through a registered vehicle. Custody standards are tightening as well: 66% now cite regulatory compliance as a top factor when choosing a custodian, up from 25% in 2025, and 66% point to security and key‑signing protocols, up from 8%.
In the advisory world, crypto still has a long way to go. Asked about the degree of crypto ETF usage, Amy Oldenburg, Morgan Stanley’s head of digital asset strategy told attendees at the DC Blockchain Summit that adoption within advisor-managed accounts remains limited.
“This has been a journey, and we’re still very early on it,” Oldenburg said, according to reporting by The Block. She added that “about 80% of what we see on our platform, is coming through the self-directed business,” even after the firm opened access to bitcoin ETFs in 2024 and gradually expanded availability.
Oldenburg described self‑directed flows as “only a piece of the puzzle” and said the firm still has to do more work with advisors to understand “how that fits into asset allocation models going forward.”
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