The Securities and Exchange Commission issued a long-awaited "token taxonomy" on Tuesday, a key step forward laying out which types of digital assets it deems to be securities.
The guidance carves out payment stablecoins, digital collectives and digital commodities as non-securities. It also clarifies how federal securities laws apply to protocol mining, staking and crypto airdrops, the SEC said in a memo.
Digital securities, or traditional securities that are tokenized, are subject to SEC rules and regulations, according to the guidance.
"We're not the securities and everything commission anymore," Chairman Paul Atkins said at the Digital Chamber's conference in Washington, in a critique of the Biden administration's stance that most crypto assets should be treated as securities.
Notably, the SEC explained that a non-security crypto asset may stop being an investment contract under securities laws when an issuer has either fulfilled or failed its representations or promises.
The crypto industry has long sought greater clarity on whether particular assets are considered securities, which typically require more regulatory disclosures than commodities.
The Commodity Futures Trading Commission joined in the interpretation, in the latest sign that Wall Street's two main regulators are no longer waiting for Congress to finalize legislation to delineate which agency has jurisdiction over which digital assets.
The SEC head also said the agency would soon issue a proposed rule teeing up a safe harbor program for startups to launch crypto companies, crypto investment contracts and security tokens without necessarily having to register with the agency.
The goal would be to allow companies to gain access to capital without being subject to enforcement action, said Atkins, adding the safe harbor could last up to four years.
"Such a safe harbor would provide crypto innovators bespoke pathways to raise capital in the U.S. while providing appropriate investor protections," Atkins said.
Atkins said the latest efforts would give the agencies a "head start" bringing certainty to the digital asset industry but urged lawmakers to continue their work on market structure legislation.
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