US Establishes "Five Categories" Framework for Crypto Assets, A Complete Guide to the New Regulatory Framework (Essential Edition)

On March 17, 2026, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly issued an interpretive document numbered 33-11412. This 68-page regulatory framework officially marks the end of a decade-long era of “enforcement over regulation” in U.S. crypto oversight, ushering in a new era of clarity and harmony driven by “Project Crypto.”

This document is not only a rare collaboration between the SEC and CFTC but also the most milestone-guiding document in the history of U.S. crypto regulation. Below is a summarized full analysis:

1. Background: From Conflict to Collaboration — “Project Crypto”

In 2017, the SEC first applied the Howey test to crypto assets through the “The DAO Report.” Over the next ten years, regulation mainly relied on enforcement actions to define asset properties, leaving the market in prolonged uncertainty and controversy.

In early 2025, the SEC established the “Crypto Task Force” and subsequently launched the “Project Crypto” initiative, co-led by SEC Chairman Paul S. Atkins and CFTC Chairman Michael S. Selig. The goal was to coordinate the authority of both agencies, establish a unified asset classification system, and provide clear pathways for crypto innovation to stay in the U.S. Market. In January 2026, the project was officially upgraded to a joint SEC-CFTC operation.

2. Asset Classification: The “Five-Category Law” Logic for Crypto Assets

Based on asset features, uses, and functions, the document classifies crypto assets into five major categories, providing the market with clear classification standards for the first time:

2. Digital Commodities

• Definition: Assets whose value derives from the “functional” operation of crypto systems and supply-demand dynamics, not reliant on management efforts by others.
• Core List: Mainstream tokens like BTC, ETH, SOL, XRP, ADA, DOT, AVAX, LINK are explicitly named as digital commodities. These assets are not controlled by any centralized entity and do not inherently generate passive income.

4. Digital Securities

• Definition: “Tokenized securities,” representing traditional securities in crypto form or digital assets with the economic substance of securities (e.g., representing ownership or dividend rights).
• Regulation: Whether on-chain or off-chain, if they meet the economic substance criteria, they fall under SEC regulation.

6. Regulated Payment Stablecoins

• Definition: Stablecoins issued by authorized institutions that meet the 2025 “GENIUS Act” definition.
• Qualitative: These stablecoins are explicitly excluded from the “security” definition and are mainly used as payment tools under specific legal constraints.

8. Digital Tools

• Use: Tokens that serve practical functions within specific crypto systems (e.g., access rights or service payments), generally not considered securities.

10. Digital Collectibles

• Definition: Assets intended for collection and/or use, representing art, music, videos, in-game items, or internet memes.
• Examples: CryptoPunks, Chromie Squiggles, WIF, VCOIN, etc.
• Qualitative: Not securities by themselves; their value stems from supply and demand rather than management efforts. However, if fragmented and sold as securities, they could be classified as such.

3. Innovation: “Separation” and “Dynamic Conversion” of Security Attributes

This is the most groundbreaking legal innovation in the document — the SEC explicitly recognizes that the “security attribute” of crypto assets is not permanent.

“Separation” Mechanism

• Principle: Projects initially considered securities (investment contracts) during fundraising due to the Howey test, but once they complete their roadmap, achieve open-source code autonomy, and decentralize network control, the asset can “separate” from the investment contract.
• Judgment Criteria: When investors no longer reasonably rely on the issuer’s “core management efforts” for profits but instead depend on the system’s operation and market supply-demand, the asset shifts from “security” to “digital commodity.”
• Timing: Separation can occur immediately upon delivery to the buyer or at a future date.

Three Scenarios for Separation

2. Issuer fulfills commitments: After completing core management efforts, even if providing non-core maintenance, the asset is no longer bound by the investment contract.
3. Issuer abandons the project: If publicly announced as abandoned and no longer fulfilling commitments, the asset is outside securities law (though the issuer may still face legal liability for fraud).
4. Secondary market trading: If subsequent buyers no longer reasonably expect profits dependent on issuer efforts, the transaction is not a security.

Transparency Recommendations

The SEC encourages project teams to publicly disclose roadmap progress and milestone achievements to help the market identify “separation points.”

4. On-Chain Activity Qualitative Analysis: Clearing the Decentralization “Minefield”

For long-standing controversial activities like staking, mining, wrapping, and airdrops, the document provides detailed and favorable interpretations:

Protocol Mining

• Qualitative: Proof-of-Work (PoW) mining is an “administrative or transactional” activity to secure the network and verify transactions.
• Conclusion: Solo or pool mining does not involve securities issuance.
• Pool Operations: Activities of pool operators are administrative and do not involve core management efforts.

Protocol Staking

• Qualitative: Staking is an administrative activity to maintain network operation.
• Scope: Includes solo staking, delegated staking, custodial staking, and liquidity staking.
• Custodial Staking: As long as it does not involve lending assets, leverage, or discretionary trading, it is not a securities activity.
• Supporting Services: Slash insurance, early unstaking, flexible yield distribution, asset aggregation, etc., are all administrative.

Staking Receipt Tokens

• Qualitative: If the underlying asset is a non-security commodity and not bound by an investment contract, the receipt token itself is not a security.
• Principle: The token acts merely as a “receipt,” not generating profits; profits come from the underlying staking activity.

Wrapping Tokens

• Definition: Users deposit crypto assets into custodians or cross-chain bridges to receive 1:1 redeemable wrapped tokens.
• Qualitative: If the underlying asset is a non-security commodity and not bound by an investment contract, wrapping tokens are “administrative functions” aimed at interoperability, not securities.
• Key Restriction: Custodians must lock assets and cannot lend, mortgage, or re-stake.

Airdrops

• Qualitative Breakthrough: If recipients do not provide money, goods, services, or other consideration, it does not meet the “money investment” element of the Howey test.
• Applicable Scenarios:
  • Airdrops to wallets holding specific tokens before announcement.
  • Rewards to early testnet users.
  • Airdrops based on application usage to qualified users.
• Red Line: If recipients are required to provide services (e.g., social media promotion) in exchange, it may constitute a securities offering.

5. Reinforcing U.S. Leadership

The document concludes with detailed analysis of its economic significance:

2. Eliminating “Chilling Effect”: Providing legal clarity reduces business stagnation caused by opaque compliance, encouraging crypto innovation to return to the U.S.
3. Lowering Compliance Costs: Clear classification and separation pathways significantly reduce legal consulting and regulatory response costs.
4. Increasing Market Transparency: The new framework requires more detailed disclosures during the “investment contract” phase, better protecting investors.
5. Promoting Competition and Innovation: Clear rules attract more issuers and entrepreneurs.
6. Improving Pricing Efficiency: Reduces price distortions caused by uncertainty.

6. Historic Breakthrough in Regulatory Collaboration

Structurally, the document establishes a clear analytical path: classify assets, assess transaction structures, and determine whether the investment relationship persists.

More importantly, this is a rare coordinated outcome between the SEC and CFTC on crypto regulation. Previously, the two agencies had long-standing disagreements over securities vs. commodities classification. This joint framework preliminarily divides major asset categories, marking a transition from “agency jurisdiction competition” to a “unified rule-based division of responsibilities.”

This 68-page document not only ends a decade of regulatory chaos but also cements the U.S.'s leadership in global crypto regulation. For practitioners, it is an essential “industry constitution”; for investors, a clear “rights protection guide”; for entrepreneurs, a definitive “compliance roadmap.”

The era of the “Wild West” in crypto assets has officially come to an end.

Original link