SEC and CFTC Crypto Guidance 2026: What Is and Isn't a Security

Q: Is Ethereum a security?

No. The SEC's March 2026 joint guidance with the CFTC explicitly classified Ethereum (ETH) as a digital commodity alongside Bitcoin, Solana, Dogecoin, XRP, Cardano, Chainlink, Polkadot, Avalanche, and others. Digital commodities are not securities under Federal securities laws.

Q: Are NFTs securities?

Generally no. The SEC's March 2026 guidance classifies NFTs as digital collectibles, which are not securities. However, fractionalized NFTs that enable individuals to acquire fractional ownership could constitute securities. Creator royalties on NFT resales do not change a digital collectible into a security.

Bottom line: In March 2026, the SEC and CFTC published joint guidance classifying crypto assets into 5 categories. Bitcoin, Ethereum, Solana, Dogecoin, XRP, and 13+ other tokens are officially digital commodities,not securities. Staking, mining, NFTs, memecoins, airdrops, and token wrapping are explicitly cleared. This guidance supersedes the SEC's 2019 "Framework for Investment Contract Analysis" and represents a shift from regulation-by-enforcement to proactive classification.

For 10 years, crypto operated under a grey cloud

From 2017 to 2024, the SEC's approach to crypto was what the industry called "regulation by enforcement." According to the SEC's own acknowledgment in this release, the Commission "pursued enforcement actions against crypto asset issuers for alleged violations of the Federal securities laws rather than developing a tailored regulatory framework."

Founders spent more on legal counsel than engineers. "Is this a security?" had no clear answer. Institutions sat on the sidelines because no compliance framework existed. "Not available to US users" became the default disclaimer across the industry. Over 300 written submissions from issuers, investors, law firms, and exchanges went into the Crypto Task Force demanding change.

Source: SEC Release No. 33-11412, Introduction, pages 4-8.

The SEC created 5 categories for crypto assets

According to the joint guidance, the SEC classifies crypto assets into five categories based on their "characteristics, uses, and functions." Three categories are explicitly not securities. One is always a security. One depends on design.

Not Securities

Digital Commodities

BTC, ETH, SOL, DOGE, XRP, ADA, LINK, DOT, AVAX, LTC, SHIB, HBAR, XLM, APT, BCH, XTZ, ALGO, LBC

Digital Collectibles

NFTs, memecoins, art (CryptoPunks, Chromie Squiggles, WIF)

Digital Tools

ENS domains, soulbound tokens, event tickets, credentials

Securities or TBD

Digital Securities

Tokens representing equity, debt, or profit-sharing rights

Stablecoins

May or may not be securities depending on their specific design

Source: SEC Release No. 33-11412, Section III "Classification of Crypto Assets," pages 13-23.

18 tokens explicitly named as digital commodities

The SEC concluded that each of these crypto assets is a digital commodity because they derive their value from market supply and demand, AND from utility on functional crypto systems, rather than from the expectation of profits from the essential managerial efforts of others.

BTCETHSOL DOGEXRPADA LINKDOTAVAX LTCSHIBHBAR XLMAPTBCH XTZALGOLBC

The CFTC confirmed that any non-security crypto asset (other than payment stablecoins under the GENIUS Act) could meet the definition of "commodity" under the Commodity Exchange Act.

Source: SEC Release No. 33-11412, Section III.A "Digital Commodities," page 14. Footnote 51.

NFTs and memecoins are digital collectibles

NFTs are like physical collectibles, but digital

CryptoPunks, Chromie Squiggles, WIF, VCOIN. Value from art, culture, and community. Even creator royalties do not change the classification. According to the SEC, "the existence of a creator royalty does not change a digital collectible into a security."

Memecoins derive value from culture, not managers

The SEC states memecoins are "acquired for artistic, entertainment, social, and cultural purposes, and their value is driven by supply and demand, rather than any essential managerial efforts of others." Not securities.

Exception: fractionalized collectibles

If you fractionalize an NFT into tradeable shares, those shares could constitute an investment contract and therefore a security.

Source: SEC Release No. 33-11412, Section III.B "Digital Collectibles," pages 16-20. Footnotes 60, 62, 64.

Staking and mining are cleared

The SEC explicitly stated that protocol mining (PoW) and protocol staking (PoS) on public, permissionless networks are not securities transactions. The key determination: these are "administrative or ministerial" activities, not investments in a common enterprise.

PoW

Proof-of-Work mining

Contributing computational resources and earning rewards. "Rewards are payments to the miner in exchange for services it provides to the PoW Network rather than profits derived from the essential managerial efforts of others." Solo mining and mining pools both covered.

PoS

Proof-of-Stake staking

Locking tokens to validate transactions. Solo staking, self-custodial delegated staking, and custodial staking are all addressed. The SEC confirmed that staking rewards are compensation for validation services, not investment returns.

SaaS

Staking-as-a-service: legal purgatory over

Companies offering staking services have been in regulatory grey zone since the SEC sued Kraken in 2023. This guidance provides the framework that was missing.

Important caveat: not all "staking" is cleared

Staking providers that have discretion over where and how to stake, or that determine or guarantee the yield, are NOT in the clear. The guidance covers protocol-level staking on public permissionless networks. Yield products with a "staking" label remain firmly within the SEC's scope.

Source: SEC Release No. 33-11412, Section V "Protocol Mining and Protocol Staking," pages 34-52.

Wrapping tokens and airdrops

Wrapping tokens is not a securities transaction

Converting a token from one chain to another (e.g. WBTC, wETH) does not create a new security. According to the SEC, wrapping is a technical operation that preserves the original asset's characteristics.

Airdrops don't automatically trigger the Howey test

If there is no investment of money, the first prong of the Howey test fails. Free token distributions are not securities by default.

Exception: airdrops tied to testnet or beta participation

This exemption does not apply where airdrops are connected to testnet usage or beta participation. If an airdrop is designed to look like a free distribution but functions as a capital raise, the SEC can still intervene.

Source: SEC Release No. 33-11412, Section VI "Wrapping," pages 54-57; Section VII "Airdrops," pages 58-62.

Digital securities and investment contracts

Tokens representing equity, debt, or profit-sharing

If a token gives holders rights to profits, dividends, or assets, it is a security. This has always been the case and remains unchanged.

Investment contracts: the Howey test is not going anywhere

The Howey test remains binding legal precedent. If someone invests money in a common enterprise with an expectation of profits from the essential managerial efforts of others, that transaction is a security. This guidance does not replace Howey. It clarifies how Howey applies to crypto.

Key nuance: A non-security crypto asset can be sold as part of an investment contract. The token itself isn't the security,the deal around it is. And that investment contract can cease to exist once the issuer fulfills their promises.

This "separation principle" means tokens sold in an ICO under an investment contract (security) can later trade freely on secondary markets as non-securities, once the project delivers what it promised.

Source: SEC Release No. 33-11412, Section IV "Crypto Assets Subject to an Investment Contract," pages 24-33.

How we got here: the timeline

2017

SEC publishes The DAO Report. "Regulation by enforcement" era begins.

2017-2024

SEC sues Ripple, Coinbase, Kraken, and dozens more. No clear framework published. Industry describes approach as "regulation by enforcement."

Jan 2025

Acting Chairman Mark T. Uyeda creates the Crypto Task Force to "draw clear regulatory lines and appropriately distinguish securities from non-securities."

Mar 2025

Crypto Task Force hosts roundtable: "How We Got Here and How We Get Out,Defining Security Status."

Jul 2025

President's Working Group publishes "Strengthening American Leadership in Digital Financial Technology."

Jul 2025

Chairman Paul S. Atkins launches "Project Crypto" to modernize securities laws for digital assets.

Jan 2026

SEC and CFTC announce joint harmonization of crypto oversight under "Project Crypto."

Mar 2026
68-page joint SEC-CFTC guidance published. Over 300 written submissions incorporated. The eggshell era is over.

Source: SEC Release No. 33-11412, Introduction, pages 4-8. Footnotes 10-20.

This isn't just clarity. This is a regime change.

Old Regime (2017-2024)

Sue first, define later

Every token is a potential security

Innovation leaves the United States

Institutions stay on the sidelines

New Regime (2025-2026)

Define first, guide always

Clear 5-category classification system

Innovation stays in the United States

Red carpet for institutional participation

What this means for you

If you're a founder building in crypto

Your compliance calculus changed overnight. You can stake, mine, airdrop, wrap, and launch functional tokens without assuming everything is a security. The guidance provides the classification framework your lawyers have been waiting for.

If you're an institution on the sidelines

Your last excuse just evaporated. Clear classification means clear allocation frameworks. The on-ramp is wide open. 18 tokens are officially commodities by both the SEC and CFTC.

If you hold these assets

BTC, ETH, SOL, DOGE, XRP, and 13+ more are now officially classified as digital commodities. That's not opinion. That's joint SEC-CFTC guidance that will be used in enforcement decisions going forward.

Why you should still consult a legal professional

Yarden Noy

Partner at DLT Law

This guidance is a major step forward. But "clarity" does not mean "anything goes." There are critical nuances that founders, staking providers, and token issuers need to understand before assuming they're in the clear.

"Functional" is the key word, and it excludes pre-sales and ICOs

A crypto asset is classified as a "digital commodity" and not a security where and when it can be used on the system as intended. This is the critical distinction. Pre-sales and ICOs, where tokens are sold before the network is functional, are still very likely investment contracts, and therefore securities. The guidance does not retroactively clear past token sales.

A "staking" label on a yield product does not put it out of scope

The guidance largely liberates PoS networks and staking service providers who facilitate protocol-level validation. But that does not mean putting a "staking" label on any yield product makes it compliant. Yield products where a provider has discretion over deployment, determines returns, or guarantees a yield remain very much within the SEC's scope. The substance of the arrangement matters, not the label.

According to Noy: "This is guidance, not legislation. It reflects the Commission's current views and will be used in future enforcement. But it can be refined, revised, or expanded based on public comment. If you're building in this space, treat this as the starting point of a conversation with your legal team, not the end of one."

Yarden Noy is a Partner at DLT Law, specializing in digital assets regulation and blockchain compliance.

Need legal guidance on crypto compliance?

DLT Law specializes in digital assets regulation, token classifications, and blockchain compliance for builders and institutions.

Frequently Asked Questions

Is Bitcoin a security according to the SEC?

No. According to the joint SEC and CFTC guidance published in March 2026 (Release No. 33-11412), Bitcoin (BTC) is classified as a digital commodity, not a security. The SEC determined that Bitcoin's value is intrinsically linked to the programmatic operation of a functional crypto system and driven by supply and demand, not by the essential managerial efforts of others.

Is Ethereum a security?

No. The SEC's March 2026 joint guidance explicitly classified Ethereum (ETH) as a digital commodity alongside Bitcoin, Solana, Dogecoin, XRP, Cardano, Chainlink, Polkadot, Avalanche, Litecoin, and others. Digital commodities are not securities under Federal securities laws.

Is crypto staking a securities transaction?

No. The SEC's March 2026 guidance states that protocol staking on public, permissionless proof-of-stake networks is an "administrative or ministerial activity" and does not constitute a securities transaction. This applies to solo staking, delegated staking, and mining pool participation.

Are memecoins securities?

No. According to the SEC's March 2026 guidance, memecoins are classified as digital collectibles. Their value is derived from "artistic, entertainment, social, or cultural significance" and from supply and demand dynamics, not from the essential managerial efforts of others.

Are NFTs securities?

Generally no. The SEC classifies NFTs as digital collectibles, which are not securities. However, fractionalized NFTs that enable individuals to acquire fractional ownership could constitute securities. Creator royalties on NFT resales do not change a digital collectible into a security.

What are the 5 categories of crypto assets defined by the SEC in 2026?

The SEC's March 2026 guidance defines 5 categories: (1) Digital Commodities,functional tokens like BTC, ETH, SOL (not securities); (2) Digital Collectibles,NFTs and memecoins (not securities); (3) Digital Tools,soulbound tokens, ENS names, event tickets (not securities); (4) Stablecoins,may or may not be securities depending on design; (5) Digital Securities,tokens representing equity, debt, or profit-sharing (always securities).

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