The SEC/CFTC Token Taxonomy: What the Five Categories Mean for Your Token

Last updated: April 5, 2026

What Changed When the SEC and CFTC Classified Crypto Tokens?

On March 17, 2026, the SEC and CFTC jointly issued a 68-page interpretive release establishing a five-category token taxonomy that replaces a decade of regulation by enforcement.¹ Release Nos. 33-11412 and 34-105020 classify every crypto token into one of five categories -- digital securities, digital commodities, stablecoins, digital tools, or digital collectibles -- and assign regulatory jurisdiction accordingly. The release explicitly classified 16 tokens, including Bitcoin, Ethereum, and Solana, as digital commodities under CFTC jurisdiction.² Of those 16, seven -- including XRP, SOL, ADA, and AVAX -- were previously the subject of SEC enforcement actions or formal investigations before the taxonomy reclassified them as commodities.³

For your token, the question is no longer whether it is a security. The question is which category applies -- and which regulator comes with it.

Key Takeaways

• Five categories, not two. The taxonomy moves beyond the binary security/commodity debate. Digital tools and digital collectibles fall largely outside SEC and CFTC jurisdiction.
• 16 tokens are classified by name. BTC, ETH, SOL, XRP, and 12 others are explicitly digital commodities under CFTC oversight.⁴
• Stablecoins get their own regime. Tokens pegged to reference assets are governed by the GENIUS Act's Permitted Payment Stablecoin Issuer framework -- separate from both the SEC and CFTC.
• The Howey test survives. The taxonomy supplements but does not replace the investment contract analysis. Tokens can still be offered as securities even if the underlying asset is a commodity.
• Classification is fact-specific. Labels on pitch decks do not control. The category depends on the token's economic substance, how it was marketed, and what the issuer promised.

Use our Token Classification Issue Spotter to identify the factors that determine your token's category.

Which of the Five Token Categories Does Your Token Fall Into?

The answer depends on your token's economic substance -- not its label, not its marketing, and not what your pitch deck calls it.⁵ The taxonomy maps each token to one of five categories based on what the token actually does and what rights it confers.

*Excludes attorney fees. These are filing, registration, and regulatory costs only -- the fixed costs that do not change regardless of who advises you.

Digital Securities

The most common founder mistake: assuming a governance token is not a security. If your token distributes revenue, pays dividends, or confers claims on an asset pool, it is likely a digital security subject to full SEC registration and disclosure.⁶ The release is explicit: "A digital asset that represents ownership or a claim on the assets or earnings of a business entity is a digital security for purposes of the federal securities laws."⁶ Tokenized versions of traditional instruments are securities regardless of the underlying technology. But the gray zone is wider than most founders expect. Uniswap's UNI token, for example, does not distribute protocol revenue to holders today. If it did, the classification analysis would shift. Governance tokens that vote on treasury distributions occupy precisely this boundary.

If your token distributes economic value to holders -- assume SEC jurisdiction until a fact-specific analysis confirms otherwise. Unregistered offerings carry disgorgement, civil penalties, and potential officer-and-director bars.

Digital Commodities

Sixteen tokens are classified by name: BTC, ETH, SOL, XRP, DOGE, ADA, AVAX, LINK, DOT, HBAR, LTC, BCH, SHIB, XLM, XTZ, and APT.⁷ If your token is on this list, the analysis is straightforward -- CFTC jurisdiction applies. If it is not, the release establishes a three-part test: "A digital asset qualifies as a digital commodity where the blockchain network has achieved the functionality represented by the issuer, no person or group exercises operational or economic control, and purchasers can no longer reasonably expect the issuer to perform managerial functions."⁸ If your token is not on the list, all three conditions must be satisfied. A token can transition from an investment contract to a digital commodity over time. The timing is fact-specific and often gradual.

If an AI agent transacts in digital commodities on your platform, CFTC jurisdiction extends to the deployer -- not just the protocol.

If your token is not on the list of 16 -- the digital commodity classification requires demonstrating functionality, decentralization, and the absence of outstanding issuer promises.

Stablecoins

A token pegged to the U.S. dollar is not automatically a "stablecoin" for regulatory purposes. Circle's USDC illustrates what qualifies: fiat-backed reserves held in U.S. dollars and short-term Treasuries, with on-demand par redemption and transparent attestations.⁹ The GENIUS Act framework applies only to tokens issued by a Permitted Payment Stablecoin Issuer with qualifying reserves and full AML/CIP programs. Algorithmic stablecoins that maintain their peg through smart contract mechanisms rather than reserves may not qualify under this framework at all -- and could be classified as digital securities instead. Yield-bearing stablecoins face the same risk. This was one of the unresolved issues that contributed to the CLARITY Act's stall in the Senate.

If your stablecoin generates yield or uses algorithmic mechanisms -- it may not qualify under the GENIUS Act, and you may be looking at SEC registration.

Digital Tools

The trap: labeling your token "utility" on a pitch deck does not make it a digital tool. The taxonomy evaluates actual function, not marketing language.¹⁰ A token that grants genuine access to a service, functions as a credential, or operates as a non-transferable membership badge is likely a digital tool -- generally outside SEC and CFTC jurisdiction. But if your holders are purchasing the token primarily expecting price appreciation rather than using its function, the analysis shifts toward investment contract. Secondary market activity driven by speculation rather than utility use is a red flag.

If your "utility token" trades on secondary markets at prices disconnected from its utility value -- the classification may not hold.

Digital Collectibles

NFTs, digital art, and meme tokens derive value from artistic merit, cultural significance, or community dynamics -- not managerial effort.¹¹ A single collectible sold as art is generally not a security. But two scenarios change the analysis. First, fractionalization: the release states that "the offer or sale of fractional interests in a digital collectible could constitute the offer or sale of a security."¹¹ Second, creator promises: if you market an NFT collection with a roadmap promising metaverse integration, revenue sharing, or value enhancement tied to your team's ongoing efforts, the analysis shifts toward investment contract -- regardless of the underlying art.

If you are selling fractional NFT interests or promising roadmap-driven value appreciation -- you may have a securities offering, not a collectible sale.

Does the Token Taxonomy Replace the Howey Test?

No. The taxonomy supplements the investment contract analysis -- it does not replace it.¹² SEC v. W.J. Howey Co. remains binding precedent, and the release explicitly preserves the Howey test as the foundational framework for determining whether a token offering constitutes a security.¹³

What the taxonomy does replace is the SEC's 2019 "Framework for 'Investment Contract' Analysis of Digital Assets" -- the staff-level guidance that served as the primary analytical tool for seven years.¹⁴ It also effectively supersedes former Director William Hinman's 2018 speech suggesting that a sufficiently decentralized token could not be a security, a position the SEC had already distanced itself from during the Ripple litigation.¹⁵

The critical distinction: a token can be a digital commodity and still be sold through an investment contract. Bitcoin is a commodity. But if someone sold Bitcoin with promises of managed returns from their trading expertise, that offering could still be a security. The taxonomy classifies the asset. Howey classifies the transaction.

The taxonomy tells you what your token is. Howey tells you whether how you sold it created a security.

What Questions Does the Token Taxonomy Leave Open?

The taxonomy resolves the security-versus-commodity binary. It does not resolve everything.¹⁶

Multi-functional tokens. A token that serves as both a governance mechanism and a gas token straddles categories. The release acknowledges overlap but provides no clear priority rule for tokens with characteristics of more than one category.

Subjective functionality. The "functionality" test for digital commodities measures a network against the issuer's own representations -- not an objective standard. Two identical networks could reach different classification results based on what each issuer promised.

DeFi protocol exposure. The taxonomy classifies tokens, not protocols. A DeFi protocol that facilitates trading across multiple token categories faces overlapping SEC and CFTC jurisdiction with no single compliance framework.

Stablecoin yield. Whether yield-bearing stablecoins qualify under the GENIUS Act or trigger securities treatment remains unresolved -- and was a primary reason the CLARITY Act stalled.

Political durability. The release is commission-level guidance, not a statute. A future administration could revise or withdraw it.

If your token touches more than one category or operates in DeFi -- the taxonomy is a starting point, not the final answer.

Classification Decision Matrix

Use this matrix to identify your token's likely classification path. This is a starting point for analysis -- not a substitute for legal counsel.

How to Classify Your Token Under the New Taxonomy

Classification is not a label you choose. It is a legal conclusion based on your token's economic substance, offering history, and current function.¹⁷ Five steps:

1. Map your token's primary characteristic. Use our Token Classification Issue Spotter to identify which category your token most closely resembles -- and which classification factors apply.

2. Audit your offering history. How the token was marketed matters as much as what it does today. Pitch decks, social media posts, and investor communications that emphasized returns or price appreciation create investment contract risk -- even if the token now functions as a utility.

3. Evaluate outstanding promises. If purchasers are still reasonably relying on your team's managerial efforts to drive value, an investment contract may still attach -- regardless of the token's underlying category.

4. Check for category overlap. Tokens with characteristics of multiple categories (governance + economic rights, utility + secondary market speculation) require individualized analysis. The taxonomy does not provide a default rule for multi-functional tokens.

5. Get a classification opinion. The taxonomy replaced ambiguity with structure, but classification under the five categories remains fact-specific. A formal classification analysis protects your project and demonstrates regulatory good faith.

The taxonomy gave the industry the framework it asked for. The question is no longer whether your regulator will come -- it is which one.

---

Disclaimer: This article provides general information for educational purposes only and does not constitute legal advice. Token classification under the SEC/CFTC taxonomy is fact-specific and evolving. Consult qualified legal counsel for advice on your specific situation.

---

Footnotes

1. Securities and Exchange Commission and Commodity Futures Trading Commission, "Joint Interpretive Release on the Classification of Crypto Assets," Release Nos. 33-11412, 34-105020 (March 17, 2026). ↩

2. Id. at 42-48 (listing 16 tokens classified as digital commodities). ↩

3. Of the 16 named digital commodities, seven -- XRP, SOL, ADA, AVAX, LINK, DOT, and XTZ -- were previously the subject of SEC enforcement actions, lawsuits, or formal investigations. The taxonomy's reclassification of these tokens as CFTC-jurisdiction commodities represents a significant shift in the agencies' enforcement posture. ↩

4. The full list: Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, Dogecoin (DOGE), Cardano (ADA), Avalanche (AVAX), Chainlink (LINK), Polkadot (DOT), Hedera (HBAR), Litecoin (LTC), Bitcoin Cash (BCH), Shiba Inu (SHIB), Stellar (XLM), Tezos (XTZ), and Aptos (APT). Id. at 44. ↩

5. Id. at 12-14 (classification based on economic substance and function, not marketing labels or issuer self-designation). ↩

6. Id. at 15-16 (digital securities category definition). ↩ ↩²

7. Id. at 42-48. ↩

8. Id. at 36-41 (three-factor analysis for digital commodity classification of non-listed tokens: network functionality, absence of central party control, and termination of reasonable reliance on issuer efforts). ↩

9. GENIUS Act of 2025, S. 394, 119th Congress (2025) (establishing the Permitted Payment Stablecoin Issuer framework, qualifying reserve requirements, and redemption obligations). ↩

10. Release Nos. 33-11412, 34-105020 at 49-54 (digital tools category: tokens with genuine practical utility, evaluated by actual function rather than marketing representations). ↩

11. Id. at 55-60 (digital collectibles category and fractionalization analysis). ↩ ↩²

12. Id. at 8-11 (preserving the investment contract analysis as the foundational framework for securities determination). ↩

13. SEC v. W.J. Howey Co., 328 U.S. 293 (1946). ↩

14. Securities and Exchange Commission, "Framework for 'Investment Contract' Analysis of Digital Assets" (April 3, 2019), available at sec.gov. ↩

15. William Hinman, Director, Division of Corporation Finance, SEC, "Digital Asset Transactions: When Howey Met Gary (Plastic)" (June 14, 2018), available at sec.gov. ↩

16. Release Nos. 33-11412, 34-105020 at 61-65 (acknowledging unresolved classification questions for multi-functional tokens, DeFi protocol exposure, and yield-bearing stablecoins). ↩

17. Id. at 10 (classification as a legal conclusion requiring fact-specific analysis of economic substance, offering circumstances, and current function). ↩