U.S. financial regulators have classified cryptocurrencies including Bitcoin and Ethereum as "digital commodities," ruling they do not constitute securities. This interpretation is expected to resolve more than a decade of uncertainty over cryptocurrencies' market status and pave the way for their integration into the institutional financial system.
The Securities and Exchange Commission released draft guidance on the interpretation of federal securities laws regarding certain cryptocurrencies and related transactions on Saturday local time. The SEC clarified that most cryptocurrencies—including Bitcoin, Ethereum, XRP, Solana, and Dogecoin—are digital commodities and not securities. The agency defined digital commodities like Bitcoin as "crypto assets whose value is determined by the programmatic operation and supply-demand dynamics of a functional cryptographic system."
The SEC determined cryptocurrencies are not securities because, unlike stocks, bonds, derivative-linked securities, and investment contract securities, they lack the characteristic of "expectation of profits derived from the managerial efforts of others."
The SEC also classified NFTs and memecoins—assets designed for collection purposes with value based on online popularity rather than technical utility—as "digital collectibles," ruling these are not securities either. Only digital collectibles structured to allow fractional ownership, similar to fractional investment schemes, may constitute securities offerings, the agency said. "Like physical collectibles, the value of digital collectibles is determined by supply and demand, not by expectations of profits derived from the essential managerial efforts of a creator," the SEC explained.
For stablecoins, the SEC applied provisions from the so-called "GENIUS Act" passed by Congress last year, excluding "payment stablecoins" issued by legally authorized issuers from securities classification. The SEC also determined that instruments with economic characteristics of securities—such as stocks, bonds, or investment contracts—will be granted the same legal status as traditional securities even when recorded on blockchain distributed ledgers.
The SEC's guidance substantially clarifies determinations regarding the securities status of cryptocurrencies, an issue that had produced conflicting rulings in federal courts. SEC Chairman Paul Atkins said, "After more than a decade of uncertainty, we are providing market participants with clear standards to understand the SEC's position on cryptocurrencies under federal securities law." He added, "This measure will serve as an important bridge for entrepreneurs and investors while Congress pursues bipartisan foundational legislation."