U.S. securities authorities classified cryptocurrencies such as Bitcoin and Ethereum as "digital commodities" and issued an authoritative interpretation that they do not fall under securities.
On the 17th (local time), the U.S. Securities and Exchange Commission (SEC) released a "statutory interpretation draft on certain crypto assets and federal securities laws related to crypto asset transactions" containing this interpretation.
In the draft, the SEC clearly said that most cryptocurrencies, including Bitcoin, Ethereum, XRP, Solana and Dogecoin, are classified as digital commodities and do not fall under securities.
The SEC defined a digital commodity as "a crypto asset whose value is determined in linkage with the programming operation and supply and demand of a functional cryptographic system." It explained that, unlike stocks (equity securities), bonds (debt securities), derivative-linked securities and investment contract securities, cryptocurrencies do not have a "structure that expects profits based on the managerial efforts of others," and therefore do not fall under securities.
Until now, U.S. federal courts have issued divergent or unclear rulings on whether cryptocurrencies are securities, depending on the case. In this guidance, the SEC cited major precedents and presented clearer standards for determining securities status.
The SEC also classified assets designed for collection purposes, such as NFTs (non-fungible tokens) and meme coins, as "digital collectibles," and interpreted that these likewise do not fall under securities. It said this is because "like physical collectibles, the value of digital collectibles is determined by supply and demand, not by an expectation of profits based on the creator's managerial efforts."
For stablecoins, it applied the Stablecoin Regulation Act that passed the U.S. Congress last year, the "Genius Act." The law provides that "payment stablecoins" issued by authorized issuers are excluded from securities. Stablecoins are cryptocurrencies designed to have their value pegged to a specific currency such as the U.S. dollar. However, stablecoins that do not meet the issuance requirements of the Genius Act were excluded from the scope of this interpretation.
Regarding digital securities (token securities), the SEC said they are "securities for which all or part of the ownership is maintained and managed on a cryptographic network." It added, "All instruments and certificates with the economic characteristics of securities fall under securities regardless of form or name."
Commissioner Paul Atkins of the SEC said, "After more than a decade of uncertainty, this interpretive guidance provides market participants with a standard to clearly understand the SEC's position on crypto assets under federal securities laws," adding, "This action will serve as an important bridge for entrepreneurs and investors while Congress pursues foundational legislation on a bipartisan basis."