SEC’s Crypto Interpretive Guidance: New Game in Town But Not Everyone Is Playing Along

As noted in our previous Expect Focus article, “Gensler-Era Crypto Regulation Goes Under the Knife: SEC/CFTC Operation Targets Uncertainty Around Crypto Assets’ Legal Status,” the SEC and the Commodity Futures Trading Commission jointly issued extensive interpretive guidance providing a new playbook on the status of various types of crypto assets and transactions under the federal securities laws. That guidance, issued on March 17, 2026, focuses in particular on the application of certain elements of the traditional Howey test, in order to determine whether a given crypto asset involves an “investment contract” and therefore a “security” for federal securities law purposes.

One of the March 17 guidance’s foundational points in this regard is that offers and sales of crypto assets are not always subject to an investment contract and, consequently, may not entail offers or sales of securities. Moreover, even if an issuer undertakes obligations that give rise to an investment contract under the Howey test, a security may subsequently cease to be present, for example, if and when the issuer has fulfilled or abandoned those obligations.

While this analytical approach has been promoted and embraced by many in the industry, such as the Digital Chamber, it has come under criticism from others, most notably by Senators Elizabeth Warren and Chris Van Hollen. Among other things, they note that the abandonment prong of this analysis provides a “roadmap to escape securities regulation” and “leaves investors unprotected and without certainty as to whether their investments are covered by the securities laws.” The senators are especially concerned about how participants in secondary market transactions for crypto assets will be able to understand the security status of those assets.

The senators have also decried the guidance’s identification of certain types of crypto assets that generally should not be treated as securities. They argue that this would allow the crypto industry to “disguise[ ] securities in one of the many products that the Commission has just categorically exempted.”

In addition to the senators’ critique, several market participants have submitted comments on the March 17 guidance, requesting further clarification. Further, the SEC on August 18, 2026, issued a wide-ranging rulemaking proposal on crypto asset offerings. While primarily focused on highly anticipated exemptions for certain of these offerings, it also proposes — among other things — a security status safe harbor that would potentially address some of the comments requesting more certainty as to the applicability of the federal securities laws.