A New Rulebook for Crypto: SEC and CFTC Release Long-Awaited Digital Asset Taxonomy
In a landmark move for digital asset regulation, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have jointly published a new guidance document establishing a formal taxonomy for cryptocurrencies and other digital assets. The framework, released on Tuesday, categorizes these assets into five distinct buckets: digital commodities (like Bitcoin and Ethereum), digital collectibles (including non-fungible tokens or NFTs), digital tools (such as utility tokens for platform access), stablecoins, and tokenized securities.
This classification system is designed to provide much-needed clarity on which assets fall under the SEC’s jurisdiction as securities and which are primarily the domain of the CFTC as commodities. The move follows years of industry criticism over regulatory ambiguity and an enforcement-heavy approach under former SEC Chairman Gary Gensler.
The SEC guidance published on Tuesday establishes which digital assets qualify as securities. Source: SEC
Why the SEC’s New Approach is a “Final Nail” in the Old Policy, According to Galaxy’s Alex Thorn
Alex Thorn, the head of firmwide research at investment firm Galaxy, offered a stark assessment of the new guidance. He argued that it effectively marks the end of the SEC’s previous regulatory framework for crypto, a policy largely shaped by Chairman Gensler. The critical distinction, Thorn explained, lies in the *type* of rule issued.
Under the prior approach, the SEC determined which cryptocurrencies constituted “investment contracts” (and thus securities) through what are known as “legislative rules” or “substantive rules.” These rules require a formal notice-and-comment process under the Administrative Procedure Act (APA), carry the force of law, and legally bind both the agency and the public.
The new 2026 guidance, however, was issued as an “interpretive rule.” Thorn detailed the significant implications:
“The distinction matters enormously under the Administrative Procedure Act (APA). A legislative rule or substantive rule goes through notice-and-comment rule-making, has the force and effect of law, and binds both the agency and regulated parties. An interpretive rule is exempt from notice-and-comment requirements, does not have the force of law, and merely explains how the agency understands existing statutory provisions,” he continued.
Source: Jake Chervinsky
Because interpretive rules lack the binding force of law, they do not compel courts to defer to the SEC’s interpretation. This provides greater flexibility for both regulators and the crypto industry to adapt as the market and legal landscape evolve. Thorn stated that this new approach offers the industry “much-needed clarity over the next 30 months,” a temporary but vital period of reduced legal uncertainty.
However, he was clear that this guidance is a stopgap, not a permanent solution. For enduring, decades-long certainty, the CLARITY Act—a comprehensive legislative bill that would codify these market structures into law—must be passed by Congress.
The CLARITY Act’s Journey: Stalls, Industry Pushback, and a Tentative Deal
The CLARITY Act (Clarity for Payment Stablecoins Act of 2025) hit a major roadblock in January 2025. Its progress stalled following significant opposition from key industry players, most notably the crypto exchange Coinbase. Critics pointed to several problematic provisions.
Primary concerns included a proposed prohibition on generating yield from “passive” stablecoin balances, which many saw as an unnecessary restriction on legitimate financial activity. Additionally, the bill contained provisions that industry advocates argued would devastate the decentralized finance (DeFi) sector. These included imposing traditional financial reporting requirements and know-your-customer (KYC) controls on DeFi protocols, which operate on the principle of permissionless access.
Legal experts, such as Jake Chervinsky, Chief Legal Officer at Haun Ventures, were vocal about these issues, highlighting the tension between regulatory goals and the foundational architecture of decentralized systems.
Rumors of a White House-Backed Deal to Revive the Bill
Despite the stalemate, recent reports suggest renewed momentum. According to a Politico report published on Friday, a tentative deal has been negotiated between the White House and key lawmakers to move the CLARITY bill forward.
While the full specifics of the agreement remain undisclosed, Senator Angela Alsobrook (D-MD) indicated that the tentative framework still includes the debated ban on stablecoin yield, but specifies it would apply only to yield from “passive balances.” This nuanced language may be an attempt to address industry feedback while maintaining a regulatory perimeter.
The fate of the CLARITY Act now hinges on whether this tentative compromise can solidify into a final bill that garners enough bipartisan support to pass both chambers of Congress. Its success would determine whether the flexible, interpretive guidance from the SEC and CFTC is solidified into the permanent, statutory framework the industry seeks.
Related: SEC interpretation on crypto laws ‘a beginning, not an end,’ says Atkins
Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026
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