By Steve Hughes, Senior Manager, U.S.
On March 17, 2026, the SEC, jointly with the Commodity Futures Trading Commission (CFTC) issued a 68-page interpretive release titled “Application of Federal Securities Laws to Certain types of Crypto Assets and Certain Transactions Involving Crypto Assets”. In a market still recovering from years of “regulation by enforcement”, this document delivers the long-requested framework defining when crypto assets and crypto-related activities are, or are not, securities under the Howey test.
For advisors with digital asset exposure or – clients who have it – this is not incremental guidance. It‘s a structural reset that directly impacts custody arrangements, product design, secondary trading and compliance program risk.
Three big takeaways
1. Digital commodities now have a bright line category
The SEC establishes a clear category for digital commodities, non-fungible tokens (NFTs), stablecoins, and tokenized securities. Once essential managerial efforts are fulfilled, assets can separate from the original Howey investment contract.
In practical terms, “once a security, always a security” is dead for secondary trading and portfolio holdings.
2. Protocol mining, staking, wrapping and airdrops are generally not securities
Self-mining, solo staking, liquid staking, tokens, redeemable wraps and airdrops without consideration fall outside securities status.
This shift effectively greenlights staking wrappers, decentralized finance (DeFi) treasury operations and custody models.
3. Marketing and promises still matter but the burden of proof has shifted
Issuer statements in marketing decks, whitepapers and communications remain critical for creating reasonable profit expectations.
However, once milestones and managerial commitments are fulfilled, securities treatment can terminate. Compliance must urgently review all marketing materials, digital portals and disclosure channels to align with the new framework.
The bottom line
This release is the clearest signal yet that the SEC is moving from enforcement-first rules to rules-first on crypto.
For advisors who have been waiting on the sidelines or paying premium legal fees to navigate gray areas, the window to redesign staking programs, custody solutions and token treasury strategies is now wide open.
The real risk is acting too slowly, or acting without updating internal policies, staff training, and Form ADV disclosures.
Looking ahead
The firms that treat this as an operational playbook are poised to capture the next wave of institutional digital asset alpha while keeping their compliance program pristine. Our experienced team can help you navigate the SEC-CFTC’s harmonized framework.
Get in touch if you have any questions or if you wish to engage IQ-EQ to conduct a comprehensive compliance audit and strategic review of your digital asset and derivative portfolios.
