SEC issues clarification guidelines! Promoting a token classification framework, what significant impact does classification have on the industry?

The SEC submits token classification guidelines to OIRA to clarify the scope of securities law application and accelerates institutionalized regulatory layout amid market structure legislative stagnation.

SEC issues interpretive guidance attempting to clarify legal positioning of crypto assets

The U.S. Securities and Exchange Commission (SEC) recently submitted a new regulatory interpretive document to the White House Office of Management and Budget (OIRA), titled “Commission Interpretation on the Application of Federal Securities Laws to Certain Types of Crypto Assets and Related Transactions.” This document aims to explain how federal securities laws apply to different types of crypto assets and trading scenarios.

Image source: SEC SEC recently submitted a new regulatory interpretive document to OIRA

The guidance is in the inter-agency review stage and is a regulatory interpretive document. It differs from formal rulemaking. Interpretive documents avoid public comment periods or lengthy legislative procedures. Interpretations issued at the SEC commission level carry significant policy guidance authority.

Market observers point out that the core purpose of this document is to establish a “Token Taxonomy.” This framework will systematically classify different types of crypto assets and determine which should be considered securities and fall under SEC jurisdiction, and which assets are subject to other regulatory frameworks.

Token taxonomy as the core of regulation, impacting industry operations

SEC Chair Paul Atkins has repeatedly emphasized that establishing a clear token taxonomy is key to resolving regulatory disputes in the crypto industry. Through classification, regulators can better define the legal nature of different tokens. For example, determining which are investment contract assets, which are utility tokens, or whether assets fall under other digital asset categories.

Image source: CoinMarketCap SEC Chair Paul Atkins

Once the classification framework is established, regulatory requirements for crypto companies regarding registration, disclosure, product issuance, and investor protection will become clearer. The operational models and compliance strategies of exchanges, issuers, and investment platforms will be directly affected.

Analysis indicates that while SEC’s interpretive guidance does not change the law itself, it will serve as an important basis for enforcement. Compared to informal explanations issued by agency staff in the past, commission-level interpretations are generally seen as more authoritative and are more likely to be cited in enforcement and judicial proceedings.

Market structure legislation stagnates, regulators accelerate action

The timing of SEC’s guidance coincides with legislative deadlock in Congress over the Digital Asset Market Structure Act. The bill was originally intended to clearly delineate the regulatory authority between the SEC and the Commodity Futures Trading Commission (CFTC) in the digital asset market. During Senate deliberations, the bill was delayed due to disputes over stablecoin yield mechanisms involving banking and crypto industry stakeholders.

In the absence of legislative progress, regulators are beginning to issue guidance based on existing legal frameworks to fill regulatory gaps. The White House has recently convened multiple meetings with banking and crypto industry representatives to seek consensus on market structure and regulatory authority issues.

Meanwhile, the CFTC has also submitted a regulatory proposal related to prediction markets to OIRA. This indicates that both major financial regulators are simultaneously strengthening their policy layout for the digital asset market.

Regulatory authority and market order, digital asset regulation enters a new phase

Currently, the SEC has three commissioners, while the CFTC has only one. Both agencies were originally designed as five-member bipartisan commissions. The current leadership is mostly composed of Republican members, with Democratic representatives yet to be appointed. The public is paying close attention to how future personnel arrangements will influence regulatory directions.

On the other hand, there are still disputes over jurisdictional boundaries in certain market sectors between the SEC and CFTC. For example, CFTC Chair Michael Selig recently stated that prediction markets should be fully regulated by the CFTC and emphasized its “exclusive jurisdiction” over related markets.

As the global digital asset market rapidly develops, U.S. regulators are gradually building a more complete legal and regulatory framework. The SEC’s push for a token classification framework is a significant step toward institutionalizing crypto regulation, which could have a profound impact on global regulatory trends in the crypto space.