SEC Advances New Framework to Define When Crypto Tokens Qualify as Securities

The U.S. Securities and Exchange Commission is stepping up efforts to bring greater clarity to the regulation of digital assets, signaling what could become the most significant overhaul of crypto oversight in years.

Speaking on February 13 after the 2026 Securities Regulation Institute in Coronado, California, James Moloney, Director of the SEC’s Division of Corporation Finance, said the agency is advancing formal recommendations designed to clarify when crypto tokens fall under federal securities laws. The initiative forms part of a broader capital formation agenda aimed at modernizing regulatory standards while maintaining investor protections.

At the center of the effort is a planned interpretive framework that would categorize digital assets and outline how to determine when they qualify as “investment contracts,” a key legal test used to assess whether an asset should be treated as a security.

According to Moloney, the Division intends to present guidance that establishes a structured taxonomy for crypto assets. The framework would explain how existing statutory definitions apply to blockchain-based tokens and under what circumstances they trigger securities obligations.

For digital assets deemed to meet the investment contract threshold, the SEC is also preparing a proposal to create what officials describe as a more coherent regulatory pathway. That could include tailored requirements for registration, disclosure, and compliance specific to crypto-related offerings.

From Enforcement to Clear Standards

The initiative is linked to SEC Chairman Paul Atkins’ reform program, known as “Project Crypto,” which seeks to reduce longstanding uncertainty surrounding token offerings. A central question regulators aim to address is whether a token initially issued to raise capital can later operate outside securities laws once its function evolves.

Moloney suggested the goal is to move away from a regulatory environment shaped largely by enforcement actions toward one guided by clearer, forward-looking standards. Market participants have long argued that the absence of formal rules has left issuers, broker-dealers, and investors navigating legal gray areas.

Alongside formal rulemaking, the Division has already issued staff statements and no-action letters addressing a range of crypto-related issues, including token distributions, broker-dealer involvement in digital asset transactions, tender offers involving tokenized securities, and disclosure obligations tied to blockchain-based investment groups.

A Defining Moment for Crypto Oversight

The SEC emphasized that it will continue monitoring developments in digital finance and release further guidance as necessary. The combination of a formal asset taxonomy and a potential rule proposal represents one of the agency’s clearest attempts yet to define how digital asset markets fit within the existing securities framework.

If adopted, the measures could significantly reshape how token issuers structure offerings and how crypto platforms operate within U.S. capital markets, potentially marking a turning point in the regulatory evolution of the industry.