Cryptocurrency regulation in the US is progressing, paving a compliant path forward for the industry. On March 17, the US SEC clarified the application of the Federal Securities Laws to crypto assets, providing a clearer interpretation for the industry. The CFTC joined the regulator in providing guidance.
SEC and CFTC have clarified the regulatory framework for crypto
The latest guidance published by the two US regulators makes it easier to codify into law a comprehensive market structure framework. SEC Chairman Paul Atkins said that after more than a decade of uncertainty, the regulatory agencies are drawing clear lines in clear terms. He pointed out that the new framework recognizes “what the previous administration refused to recognize”: that most crypto assets are not securities per se. CFTC Chairman Michael S. Selig stated that for too long, American builders, innovators and entrepreneurs have been waiting for clear guidance on the status of crypto assets, and now the wait is over. Together with Atkins, he is committed to promoting a regulatory environment that allows the crypto industry to thrive in the US, with clear and rational rules that will underpin the new frontier of finance.
SEC official release SEC official notes include several sections such as the definition of a security, the status of crypto assets and asset transactions, new crypto categories, clarifying the application of federal securities laws to: Airdrops Protocol mining Protocol staking Wrapping a crypto asset that is not a security
Classification of crypto assets
The SEC noted that crypto assets include a wide range of instruments with different characteristics, uses and functions. Crypto assets are classified into 5 categories:
1. Digital goods (commodities)
Digital commodities are defined as crypto assets that are intrinsically linked to and derive their value from the programmatic operation of a functioning crypto system, the dynamics of supply and demand, rather than the expectation of profiting from the essential managerial efforts of others. Examples include 16 digital assets: Aptos (APT) Avalanche (AVAX) Bitcoin (BTC) Bitcoin Cash (BCH) Cardano (ADA) Chainlink (LINK) Dogecoin (DOGE) Ether (ETH) Hedera (HBAR) Litecoin (LTC) Polkadot (DOT) Shiba Inu (SHIB) Solana (SOL) Stellar (XLM) Tezos (XTZ) XRP (XRP)
2. Digital collectibles
Digital collectibles are crypto assets designed to be collected and/or used. Many represent or convey rights to artwork, music, videos, trading cards, game items, or digital representations/references to memes, characters, current events, or trends. They have no intrinsic economic properties/rights, such as generating passive income or conveying rights to future income, profits or assets of a commercial enterprise or other entity. According to the SEC, digital collectibles are not securities. Examples include: CryptoPunks Chromie Squiggles Fan Tokens WIF VCOIN
3. Instruments digital
Digital instruments are crypto-assets with no intrinsic economic property/rights that serve a practical function, such as a subscription, ticket, credential, property title or identity badge. They are usually issued for use in connection with crypto systems and are non-transferable. Their value is derived from practical functionality, and they can be issued by a central party or autonomously, according to the programmatic operation of a cryptosystem. Digital instruments are not considered securities. Examples include: Ethereum Name Service Domains NFT Ticket Consensus Microcosms from CoinDesk
4. Stablecoins
Stablecoins are defined as crypto assets designed to maintain a stable value against a reference asset such as the US dollar. Payment stablecoins issued by an authorized issuer are not securities.
5. Digital securities
Digital securities, also known as tokenized securities, are financial instruments listed in the definition of a security that are formatted or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks.
SEC classification represents a turning point for institutional adoption
Bitget CEO Gracy Chen commented on the new formal classification of crypto assets by the SEC, saying it is a step forward towards clear regulations, especially for digital commodities, collectibles and stablecoins. According to Chen, the new framework has the following benefits: Reduces long-standing ambiguity Focuses on how assets are structured, promoted and used Supports long-term sustainable development Encourages compliant innovation Drives greater institutional adoption Generates significant capital inflows Bitget CEO pointed out that the new rules on non-securities asset classes, such as commodities, pave the way for expanded participation in altcoins and other tokens, which were previously considered high risk due to uncertainty regarding the application of the legislation. Chen noted that some ongoing edge case debates could cause short-term volatility in certain assets, but overall the new regulatory framework will: Build market confidence Accelerate product development (new derivatives, tokenized offerings) Support widespread adoption
What's next for the industry?
The SEC chairman also mentioned the importance of clearer regulation for the crypto industry, which will give innovators more ways to raise capital in the US while ensuring adequate investor protection. In his recent speech «Regulation Crypto Assets: A Token Safe Harbor», Atkins also mentioned the need for: A startup exemption that could last up to 4 years and give developers a transition period to reach maturity A fundraising exemption for investment contracts involving certain crypto assets that would allow entrepreneurs to raise up to $75 million in a year An investment contract and safety zone from the definition of value securities for certain crypto assets, which could apply once certain conditions are met Overall, in the context of clear industry regulation, Atkins envisions a new chapter for American innovation. BUY BITCOIN