Bitcoin News Today: From Securities to Commodities: SEC Lets Tokens Evolve with Decentralization

The U.S. Securities and Exchange Commission (SEC) has unveiled a structured framework to classify digital assets, aiming to bring clarity to the regulatory status of cryptocurrencies and reduce uncertainty for market participants. Announced by SEC Chair Paul Atkins during a speech at the Federal Reserve Bank of Philadelphia on November 12, 2025, the token taxonomy divides crypto assets into four categories: securities, commodities, collectibles, and tools. This initiative, part of Project Crypto, leverages the Howey test - a 1946 legal standard for identifying investment contracts - to determine whether tokens qualify as securities.

Under the taxonomy, digital commodities or network tokens, which function primarily for utility within blockchain networks, are not classified as securities once the initial investment phase concludes. Similarly, digital collectibles, such as non-fungible tokens (NFTs) representing unique items, and digital tools providing practical functionality (e.g., software access) are excluded from securities laws if they lack investment contract elements. In contrast, tokenized securities - explicitly representing financial ownership - remain under SEC oversight. Atkins emphasized that this framework allows tokens to transition from securities to commodities as projects decentralize, stating, "Once the investment contract has run its course", "the token may continue to trade, but those trades are no longer securities transactions".

The framework is designed to balance innovation with investor protection. By applying the Howey test, the SEC aims to create a predictable environment for developers and investors while maintaining strict enforcement against fraud. Industry estimates suggest compliance costs for non-security offerings could decrease by up to 30% under this system. For investors, the taxonomy provides clearer guidelines on asset risks and regulatory status, helping distinguish between securities requiring prospectus disclosures and commodities traded on exchanges like those overseen by the Commodity Futures Trading Commission (CFTC).

The proposal has sparked debate over regulatory jurisdiction. While the SEC's plan focuses on securities classification, the CFTC's role in overseeing commodities - including potential spot markets for cryptocurrencies - remains a key point of contention. Recent Senate drafts, such as the Digital Asset Market Clarity Act and the Responsible Financial Innovation Act, propose shifting oversight of digital commodities to the CFTC or creating a hybrid framework for tokens straddling securities and commodities. Experts like Jeff Park, chief investment officer at ProCap BTC, argue the CFTC's commodity-focused approach better aligns with crypto's global, efficiency-driven nature.

Atkins' announcement follows months of public engagement, including over 100 meetings and written feedback from stakeholders. The SEC plans to finalize rules defining "investment contracts" and establish a decentralization certification process, enabling tokens to exit securities status once network control is sufficiently distributed. This could pave the way for projects like Ethereum to transition from securities to commodities, provided governance becomes decentralized enough to meet regulatory thresholds.

The framework's impact on major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) remains speculative. While BTC is likely to retain its commodity status under the CFTC, ETH's classification hinges on its decentralization progress. Market analysts note that regulatory clarity could boost institutional participation and liquidity, though delays in implementation pose risks to investor confidence.