SEC And CFTC Joint Guidance Maps Howey Test To Four Crypto Activities

The U.S. Securities and Exchange Commission on March 17, 2026, released formal interpretive guidance clarifying how federal securities laws apply to four crypto activities under the Howey test, according to multiple law firm analyses of the release. The guidance, issued jointly with the Commodity Futures Trading Commission, addresses token sales, staking receipt tokens, token buybacks, and network upgrades, marking a significant shift from the SEC's prior enforcement-first approach to crypto regulation. The interpretive release, titled "Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets" (Release Nos. 33-11412; 34-105020), establishes a functional taxonomy that classifies crypto assets into five categories while reaffirming that most crypto assets are not themselves securities.

The SEC's guidance applies the Howey test from the 1946 Supreme Court case SEC v. W.J. Howey Co. to token sales, clarifying that whether a token sale constitutes an investment contract depends on the surrounding facts and circumstances of each offering. The guidance emphasizes that the analysis applies separately to each offering, meaning the same token could be deemed a security in one context but not another. According to King & Spalding's analysis, the SEC identified five categories of crypto assets: digital commodities (e.g., Bitcoin, Ether), digital collectibles, and other classifications that help determine securities status.

The guidance addresses staking receipt tokens, including liquid staking tokens, and clarifies that these instruments may or may not be deemed securities depending on the specific facts. According to Bressler's analysis, liquid staking tokens are not securities, provided certain conditions are met. The guidance provides interpretive clarity that several activities relevant to the crypto ecosystem, including protocol mining, protocol staking, and the wrapping of non-security crypto assets, do not themselves create investment contracts.

The March 17, 2026, release is interpretive guidance, not a new rule or enforcement action, meaning it clarifies how existing securities laws apply to crypto activities rather than creating new legal obligations. According to Debevoise & Plimpton, the proposed rules for "Regulation Crypto Assets," issued August 18, 2026, build directly on the interpretive release, indicating the guidance serves as a foundation for future rulemaking.