The SEC has never published a formal taxonomy of digital asset types — until March 2026, when the SEC and CFTC jointly issued interpretive guidance establishing a formal token taxonomy for digital assets, with Chairman Atkins stating that most crypto assets should not be considered securities outright. This followed Chairman Atkins’ November 12, 2025 unveiling of Project Crypto, which included plans for a token taxonomy anchored in Howey test investment contract analysis. Prior to this joint guidance, the Commission’s enforcement actions, staff statements, and court filings revealed a de facto classification system — spanning 125 cryptocurrency-related enforcement actions between 2021 and 2024 generating $6.05 billion in penalties according to Cornerstone Research — that market participants mapped across at least nine distinct categories of digital assets.
Security Tokens
Security tokens are digital assets explicitly designed to represent traditional securities — equity, debt, revenue shares, or fund interests — on a blockchain. These tokens are unambiguously securities under the Howey test because they are intentionally structured as investment contracts.
The security token market reached cumulative issuance exceeding $10 billion by mid-2025, with STO issuance growing from $5.6 billion in 2024 to $6.66 billion in 2025. The broader RWA on-chain market reached $19.4 billion in early 2026 according to RWA.xyz. Major platforms include tZERO (40% market share, near-24/7 trading since December 2025), Securitize ($4 billion+ in tokenized AUM, BUIDL fund $1.87 billion), and INX (acquired by Republic for $60 million in April 2025).
Security tokens are typically issued under Regulation D 506(c) for accredited investor offerings, Regulation A+ for broader retail access, or Regulation S for offshore sales. Full Section 5 registration remains rare due to cost and complexity.
Equity Tokens
Equity tokens represent ownership interests in a legal entity — shares, membership interests, or partnership interests recorded on a blockchain. The SEC treats these identically to traditional equity securities, requiring full registration or an applicable exemption.
Notable examples include INX’s registered token (representing an interest in INX Limited) and Exodus Movement’s Reg A+ qualified shares (tradable on the tZERO ATS). These tokens typically include dividend rights, voting rights, and liquidation preferences that mirror their off-chain counterparts.
Debt Tokens
Debt tokens represent fixed-income obligations on a blockchain — bonds, notes, or other debt instruments with defined payment schedules, interest rates, and maturity dates. The SEC has generally treated blockchain-based debt instruments as securities, consistent with the treatment of traditional fixed-income securities.
Revenue Share Tokens
Tokens that entitle holders to a percentage of project revenue sit firmly in securities territory. The SEC’s enforcement actions against projects offering revenue-sharing tokens — including BlockFi and similar yield-generating platforms — confirm that revenue participation rights constitute investment contracts regardless of the underlying technology.
Utility Tokens
Utility tokens — designed to provide access to a product or service within a blockchain ecosystem — present the most contested classification questions. The SEC’s position, articulated in the 2019 Framework, is that a token’s “utility” label does not determine its securities classification; the economic reality of the transaction does.
Tokens that the SEC has challenged as securities despite claimed utility include Telegram’s Gram tokens (access to the TON network), Kik’s Kin tokens (in-app payments), and LBRY Credits (content publishing). In each case, the SEC argued that the tokens were marketed and sold as investment opportunities, regardless of their purported utility function.
The narrow conditions under which the SEC has acknowledged non-security utility tokens — the TurnKey Jet and Pocketful of Quarters no-action letters — require such restrictive features (no transferability, fixed pricing, no profit expectations) that they capture only a tiny fraction of utility token designs.
Governance Tokens
Governance tokens grant holders voting rights in protocol decision-making — parameter changes, treasury allocation, upgrade proposals, and similar governance functions. The SEC has not issued specific guidance on governance tokens, but enforcement signals suggest the Commission views most governance tokens as securities.
The analysis turns on whether governance rights create profit expectations. If governance decisions affect token value — for example, voting to reduce token supply or allocate treasury funds to development — holders arguably expect profits from the collective governance effort. This analysis is consistent with the Howey framework and has been referenced in SEC complaints against DeFi protocols.
Stablecoins
Stablecoins — tokens pegged to a reference asset, typically the US dollar — present a nuanced classification question. The SEC has generally not treated fully-collateralized, dollar-pegged stablecoins (USDC, USDT) as securities, though it has not issued formal guidance confirming this position.
Algorithmic stablecoins, which maintain their peg through programmatic supply adjustments rather than asset reserves, face stronger securities arguments. The SEC’s enforcement action against Terraform Labs treated UST (an algorithmic stablecoin) and LUNA as securities, in part because the stability mechanism relied on Do Kwon and the Terraform team’s ongoing efforts.
NFTs
Non-fungible tokens present fact-specific classification challenges. The SEC issued a statement in 2023 indicating that NFTs could be securities depending on their economic characteristics. NFTs that are marketed as investments, offered in large editions, or that entitle holders to future revenue share present the strongest securities arguments.
The SEC’s enforcement action against Impact Theory (August 2023) — a $30 million settlement for unregistered NFT sales — established precedent that NFTs can constitute investment contracts when sold with promises of future value derived from the issuer’s efforts.
Wrapped and Synthetic Assets
Wrapped tokens (representing an asset from one blockchain on another) and synthetic assets (tokens that track the price of an underlying asset) each raise derivative-like classification questions. The SEC has not published specific guidance, but synthetic assets that track the price of securities (synthetic stock tokens, tokenized index funds) are likely classified as securities or derivatives subject to SEC or CFTC jurisdiction.
For a detailed comparison of SEC and CFTC jurisdictional boundaries over digital assets, see our analysis of SEC vs. CFTC jurisdiction. For entity-specific classification approaches, review our profiles of Prometheum and Polymath, which have built compliance frameworks around specific token classification models.
Real-World Asset Tokens (RWAs)
The tokenization of real-world assets — real estate, commodities, receivables, intellectual property — represents one of the fastest-growing segments of the security token market. BlackRock’s BUIDL fund (a tokenized money market fund) reached $1.7 billion in assets under management by early 2026, demonstrating institutional appetite for tokenized RWAs.
The SEC’s classification of RWA tokens depends on the asset and structure:
Real estate tokens. Tokenized interests in real property — whether structured as LLC membership interests, REIT shares, or tenancy-in-common interests — are uniformly treated as securities. The SEC has not drawn a distinction between tokenized and traditional real estate securities for classification purposes.
Commodity-backed tokens. Tokens backed by physical commodities (gold, silver, oil) raise jurisdictional questions between the SEC and CFTC. If the token represents an interest in a pooled investment vehicle holding commodities, the SEC typically asserts jurisdiction. If the token is a receipt for a specific quantity of commodity, CFTC jurisdiction may apply. The SEC vs. CFTC jurisdiction analysis explores this boundary in detail.
Receivables tokens. Tokenized invoices, trade receivables, or revenue streams are generally classified as securities — specifically as notes under the Reves “family resemblance” test — when offered as investments to passive holders.
Classification Decision Framework
Token issuers can use the following analytical framework to evaluate their likely classification:
| Factor | Favors Security | Favors Non-Security |
|---|---|---|
| Purchaser intent | Investment/appreciation | Consumptive use |
| Marketing emphasis | Returns, growth, appreciation | Utility, access, function |
| Transferability | Freely tradable on exchanges | Restricted or non-transferable |
| Network status | Pre-launch or development stage | Fully operational |
| Team dependence | Centralized development team | Decentralized, autonomous |
| Token supply | Team holds significant supply | Widely distributed |
| Price mechanism | Market-driven, speculative | Fixed or algorithmically stable |
This framework synthesizes the SEC’s 2019 guidance and subsequent enforcement patterns. No single factor is determinative — the analysis depends on the totality of circumstances as evaluated under the Howey test.
Compliance Pathways by Token Type
Each classification carries different compliance obligations:
Unambiguous security tokens (equity, debt, revenue share, fund tokens) must be offered under a registered offering exemption — typically Reg D 506(c) for accredited investors or Reg A+ for broader retail access. Secondary trading occurs on registered ATS platforms through broker-dealers subject to Reg BI obligations.
Contested tokens (utility, governance, certain NFTs) face a strategic choice: structure for compliance as securities (using exemptions) or structure to avoid classification (using the narrow parameters from no-action letters). The risk-reward calculation depends on the project’s capital requirements, desired token functionality, and enforcement risk tolerance.
Likely non-securities (fully-collateralized stablecoins, certain infrastructure tokens) may proceed without registration but face ongoing regulatory uncertainty. The absence of formal SEC clearance means classification risk persists.
Impact of Pending Legislation
The FIT21 Act would replace this factor-based taxonomy with statutory categories based on measurable decentralization criteria — potentially providing the bright-line rules that the current framework lacks. Commissioner Peirce’s Token Safe Harbor proposal offers an alternative approach: a temporary exemption during which tokens can develop toward decentralization without immediate classification consequences.
Until legislative or regulatory reform occurs, the taxonomy described above — derived from enforcement actions, staff guidance, and court decisions — remains the operative classification framework. For the Crypto Task Force’s approach to classification reform, see our analysis. For FINRA rules applicable to broker-dealers handling classified security tokens, see our regulatory guide. For platform-specific compliance approaches, review our entity profiles of Securitize, tZERO, and Prometheum. For the SEC’s official classification guidance, see SEC Framework for Digital Assets.
Emerging Token Categories
Several token categories have emerged since the 2019 Framework that do not fit neatly into the existing taxonomy:
Liquid Staking Tokens
Liquid staking tokens (LSTs) represent staked positions in proof-of-stake networks — allowing holders to earn staking rewards while maintaining liquidity through a tradable derivative token. Examples include Lido’s stETH and Rocket Pool’s rETH. The SEC has not published specific guidance on LSTs, but their structural resemblance to pooled investment vehicles (multiple depositors contributing assets to a pool managed by a protocol operator) creates strong investment contract arguments.
The 2019 Framework’s analysis of “pooling of assets” and “efforts of others” both weigh toward securities classification for LSTs where the protocol operator selects validators, manages withdrawal queues, and distributes rewards. The SEC’s enforcement actions against DeFi protocols suggest the Commission views these structures as securities offerings.
Restaking Tokens
Restaking tokens — which allow staked assets to secure multiple protocols simultaneously — add another layer of complexity. These tokens represent claims on underlying staked assets that are themselves securing blockchain networks, creating a layered security-like structure that the existing taxonomy does not directly address.
AI Agent Tokens
Tokens associated with autonomous AI agents — programs that independently execute strategies, manage treasury assets, and interact with DeFi protocols — present novel classification questions. If the AI agent functions as the “active participant” under the Framework’s analysis, the question becomes whether an autonomous software program’s efforts constitute the “efforts of others” that purchasers rely upon for profit expectations.
Tokenized Treasury Products
The rapid growth of tokenized U.S. Treasury products — including BlackRock’s BUIDL fund ($1.7 billion AUM), Franklin Templeton’s BENJI fund, and Ondo Finance’s USDY — has created a category of tokens that clearly represent securities but may benefit from streamlined regulatory treatment given the underlying assets’ low-risk profile. These products are typically offered under Reg D 506(c) to accredited investors and provide yield through exposure to U.S. government obligations.
Classification Enforcement Statistics
The SEC’s enforcement record reveals patterns in how classification disputes are resolved:
Between 2017 and 2025, the SEC brought enforcement actions against over 100 digital asset projects for unregistered securities offerings. Of these:
- Approximately 70% involved utility tokens marketed with investment characteristics
- 15% involved yield-generating platforms (BlockFi, Celsius, Voyager)
- 10% involved ICO-era projects with explicit investment promises
- 5% involved NFTs or other novel token structures
The SEC collected $4.7 billion in penalties and disgorgement from crypto-related enforcement actions in fiscal year 2023 alone, demonstrating the financial magnitude of classification disputes. For detailed enforcement statistics, see our enforcement tracker.
No defendant in a contested SEC enforcement action has successfully argued that its token was not a security using the Framework’s “sufficiency” factors alone. The Ripple decision provided partial relief for programmatic exchange sales, but the ruling’s scope remains limited and is subject to ongoing appellate proceedings.
Understanding where each token type falls within the SEC’s classification framework is essential for issuers selecting offering exemptions, platforms designing market structure compliance, and legal counsel advising on enforcement risk. The taxonomy above reflects current SEC positions as revealed through enforcement actions and staff guidance — positions that continue to evolve as new token structures emerge and courts issue new precedent.