For years, crypto fund managers have operated without a clear regulatory map. That changed on March 17, 2026, when the SEC issued a formal interpretation clarifying how federal securities laws apply to crypto assets, and the CFTC co-signed it.
This isn’t proposed rulemaking. It’s the SEC’s formal interpretation of how existing federal securities laws apply to crypto assets, and while it provides the clearest regulatory guidance to date, it is not a new law and remains subject to interpretation by the courts.
Table of Contents
- The Era of Oversight Primarily by Enforcement is Over
- The Token Taxonomy: Five Categories Fund Managers Need to Know
- Investment Contracts: When They Begin and End
- Staking, Mining, Wrapping, and Airdrops: Clarity at Last
- The SEC-CFTC Coordination: Why It Matters for Fund Managers
- What Fund Managers Should Do Now
The Era of Oversight Primarily by Enforcement is Over
Prior to 2025, the SEC’s primary crypto oversight tool was enforcement, applying the Howey test case by case and leaving managers to guess. As the SEC’s official fact sheet acknowledges, the Commission failed to build a framework that accommodated innovation and instead focused on bringing enforcement actions, effectively “regulating by enforcement.”
That approach is formally behind us. The new interpretation provides a coherent token taxonomy, addresses when a non-security crypto asset becomes subject to an investment contract (and when it doesn’t), and clarifies the treatment of staking, mining, wrapping, and airdrops.
The Token Taxonomy: Five Categories Fund Managers Need to Know
The SEC has classified crypto assets into five distinct categories. Where your fund’s holdings land determines your compliance obligations.
1. Digital Commodities — Not Securities
Assets that derive value from the programmatic operation of a functional crypto system and supply/demand dynamics, not from the managerial efforts of others.
2. Digital Collectibles — Not Securities
Assets designed for collection or use, including those representing rights to artwork, music, gaming items, or digital representations of events and trends.
3. Digital Tools — Not Securities
Assets that perform a practical function: memberships, tickets, credentials, identity badges, or title instruments.
4. Stablecoins — Not Securities (with conditions)
GENIUS Act-compliant payment stablecoins issued by permitted issuers fall outside securities regulation.
5. Digital Securities (Tokenized Securities) — Are Securities
Financial instruments formatted as or represented by a crypto asset, where ownership is maintained on a crypto network. These remain squarely within SEC jurisdiction.
This taxonomy gives fund managers a working framework for portfolio analysis, but it also creates new documentation obligations. Your audit and compliance processes need to reflect how each position is classified and why.
Investment Contracts: When They Begin and End
One of the most consequential clarifications involves investment contracts. The SEC confirmed that a non-security crypto asset can become subject to an investment contract when an issuer offers it with representations or promises of essential managerial efforts from which purchasers would reasonably expect profits. Equally important: that investment contract can terminate when an issuer either fulfills its promises or demonstrably fails to do so.
This means tokens previously treated as securities may now be candidates for reclassification. But reclassification requires careful documentation and a defensible rationale. Don’t assume, document.
Staking, Mining, Wrapping, and Airdrops: Clarity at Last
The guidance explicitly addresses four activities crypto fund managers regularly engage in. Protocol mining, protocol staking, and the wrapping of a non-security crypto asset do not constitute the offer and sale of a security. Certain airdrops that don’t involve an “investment of money” under the Howey test also fall outside securities coverage.
That said, “certain” is doing meaningful work in that sentence. Documentation of your specific programs remains essential to establishing that your activities fit within the guidance.
The SEC-CFTC Coordination: Why It Matters for Fund Managers
The March 17 interpretation didn’t arrive in isolation. On March 11, 2026, the SEC and CFTC signed a formal Memorandum of Understanding committing both agencies to coordinated oversight. As CoinDesk reported, the agreement formalizes joint projects between the two agencies, with the development of a crypto oversight framework listed as a core aim. Previously, the two regulators sometimes directly contradicted each other, including on how certain assets were classified as securities versus commodities. That dynamic has fundamentally shifted.
For fund managers, the practical implications are significant. As analyzed by Katten Muchin Rosenman via Mondaq and Latham & Watkins’ Global Fintech & Digital Assets Blog, the MOU targets duplicative agency actions and coordinates examination planning for dually registered firms. The agencies have also committed to conferring before issuing Wells notices in matters of overlapping jurisdiction, a meaningful protection for managers operating across asset classes. Enforcement actions that previously could land a firm facing similar accusations from both agencies simultaneously are now subject to coordination on charges, sequencing, and litigation strategy.
What Fund Managers Should Do Now
This is an active compliance moment. Managers should review current portfolio classifications against the new taxonomy, assess whether any tokens previously treated as securities are candidates for reclassification, and ensure staking, mining, and airdrop programs are documented in ways consistent with the new guidance. For dually registered firms, the MOU’s coordinated exam framework warrants a fresh look at how you’re managing your regulatory relationships across both agencies.
Richey May’s Alternative Investments team is actively working with clients to navigate these changes. If you have questions about how the SEC’s new crypto interpretation affects your fund’s audit, tax position, or compliance obligations, reach out to Steve Vlasak at svlasak@richeymay.com.
Sources:
- SEC Press Release: SEC Clarifies the Application of Federal Securities Laws to Crypto Assets (March 17, 2026)
- SEC Fact Sheet: Application of the Federal Securities Laws to Certain Types of Crypto Assets (March 17, 2026)
- CoinDesk: SEC, CFTC End Years of Rivalry with Deal That Will Mean Combined Crypto Oversight (March 11, 2026)
- Mondaq / Katten Muchin Rosenman: Common Ground — The SEC and CFTC Enter Historic MOU (March 20, 2026)
- Global Fintech & Digital Assets Blog / Latham & Watkins: SEC and CFTC Sign Landmark MOU on Regulatory Harmonization (March 20, 2026)
