US Establishes "Five-Category Law" for Crypto Assets, Understanding the New Regulatory Framework at a Glance (Essential Version)

Author: BitpushNews

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. The 68-page regulatory framework officially declares 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 example of collaboration between 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 decade, 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 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 powers of both agencies, establish a unified asset classification system, and provide a clear path for crypto innovation to stay in the U.S. 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 characteristics, usage, and functions, the document divides crypto assets into five major categories, providing the market with a clear classification standard for the first time:

1. Digital Commodities
2. Definition: Assets whose value derives from the “functional” operation of crypto systems and supply-demand dynamics, not reliant on efforts by others.
3. Core List: The document explicitly names mainstream tokens like BTC, ETH, SOL, XRP, ADA, DOT, AVAX, LINK as digital commodities. These assets are not controlled by any centralized entity and do not inherently generate passive income.
4. Digital Securities
5. Definition: “Tokenized securities,” representing traditional securities in crypto form or digital assets with a security-like economic substance (e.g., representing ownership or dividend rights).
6. Regulation: Whether on-chain or off-chain, if they meet the economic substance, they fall under SEC regulation.
7. Regulated Payment Stablecoins
8. Definition: Stablecoins issued by authorized institutions that meet the 2025 “GENIUS Act” definition.
9. Qualitative: These stablecoins are explicitly excluded from the “security” definition and are mainly used as payment tools under specific legal constraints.
10. Digital Tools
11. Usage: Tokens that serve practical functions within specific crypto systems (e.g., access rights or service payments), generally not considered securities.
12. Digital Collectibles
13. Definition: Assets intended for collection and/or use, representing artworks, music, videos, in-game items, or internet memes.
14. Examples: CryptoPunks, Chromie Squiggles, WIF, VCOIN, etc.
15. Qualitative: Not securities themselves; their value stems from supply and demand rather than efforts by others. However, if fragmented and sold, they may constitute securities.

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

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

“Separation” Mechanism

• Principle: Projects may initially be considered securities (investment contracts) during fundraising if they meet the Howey test. But once the project completes its roadmap, achieves open-source code autonomy, and decentralizes network control, the asset can be “separated” from the investment contract.
• Judging Standard: 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 of Separation: It can occur immediately upon delivery to the buyer or at a future date.

Three Scenarios for Separation

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

Transparency Recommendations

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

4. On-Chain Activities: Qualifying for Decentralization “Minefield Clearing”

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

Protocol Mining

• Definition: PoW mining is an “administrative or transactional” activity to ensure network security and verify transactions.
• Conclusion: Whether solo or pool mining, it does not involve securities issuance.
• Pool Operations: Activities of pool operators are administrative and do not constitute core management efforts.

Protocol Staking

• Definition: Staking is an administrative activity to maintain network operation.
• Scope: Includes solo staking, delegated third-party 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: Insurance for slashing, early unstaking, flexible yield distribution, asset aggregation, etc., are all administrative.

Staking Receipt Tokens

• Definition: 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 only as a “receipt,” does not generate yield, and profits come from the underlying staking activity.

Wrapping Tokens

• Definition: Users deposit crypto assets into custodians or cross-chain bridges to receive 1:1 pegged, 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-pledge them.

Airdrops

• Breakthrough in Qualitative: As long as 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, announced before the airdrop.
  • Rewards to early testnet users.
  • Airdrops to qualified users based on app usage.
• Red Line: If recipients are required to provide services (e.g., social media promotion) in exchange for the airdrop, it may constitute a securities offering.

5. Strengthening U.S. Leadership

The document concludes with a detailed analysis of its economic significance:

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

6. A Historic Breakthrough in Regulatory Collaboration

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

More importantly, this is a rare coordinated outcome between SEC and CFTC on crypto regulation. Previously, the two agencies long disagreed on “security vs. commodity” distinctions. This joint framework essentially provides a preliminary classification of 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.

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