In the cryptocurrency market, the long-standing ambiguous distinction between "securities" and "non-securities" has been a Damocles sword hanging over many projects, and it is also the root of ongoing friction between the U.S. Securities and Exchange Commission (SEC) and the crypto industry. However, on November 12, 2025, SEC Chairman Paul Atkins first articulated his plan for a cryptocurrency "token classification framework," aimed at clearly distinguishing which cryptocurrencies are considered securities and advancing digital asset regulation in a new way. Paul Atkins explicitly stated that "digital commodities" or "network tokens," such as Bitcoin and Ethereum, as well as "digital collectibles" and "digital tools," are not securities. This milestone plan is expected to bring unprecedented regulatory clarity to the crypto industry and clear obstacles for the healthy development of Web3.
- SEC Chairman Paul Atkins: The Core Essence of the "Token Classification Framework" Plan
The "token classification framework" plan announced by Paul Atkins will be based on the Howey Test to redefine various types of crypto assets. The Howey Test originates from a 1946 U.S. Supreme Court ruling, which the SEC frequently cites to determine whether an asset constitutes an investment contract and is thus considered a security.
Paul Atkins later added that cryptocurrencies can be part of an investment contract, but this does not mean they will always be so. In the SEC's press release, Paul Atkins emphasized the following attributes of various crypto assets:
"Digital commodities" or "network tokens" are not securities: Their value is essentially related to the programmatic operation of a "functionally complete" and "decentralized" crypto system, and arises from this, rather than from the expected profits derived from the key management efforts of others. This classification means that mainstream cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) could be clearly identified as "non-securities" if their underlying networks are truly decentralized.
"Digital collectibles" are not securities: These assets are intended for collection and/or use, and may represent or grant holders rights to digital expressions or references of artworks, music, videos, trading cards, in-game items, or internet memes, characters, current events, or trends. Buyers of digital collectibles do not expect to profit from the daily management efforts of others. This classification provides a clear legal definition for digital collectibles like NFTs.
"Digital tools" are not securities: These crypto assets have practical functions, such as memberships, tickets, vouchers, proof of ownership, or identity badges. Buyers of digital tools do not expect to profit from the daily management efforts of others. This encompasses a wide range of utility tokens present in the Web3 ecosystem.
"Tokenized securities" are now, and will always be, securities: These crypto assets represent ownership of financial instruments listed in the definition of "securities," which are maintained on a crypto network. This clarifies the securities attributes in the tokenization of real-world assets (RWA).
Paul Atkins stated that this list is not exhaustive and will be further refined.
- The Crypto Industry Welcomes a "Spring" of Regulation: Bipartisan Support and Legislative Advancement
The "token classification framework" plan by SEC Chairman Paul Atkins was proposed against the backdrop of increasing momentum for crypto legislation in the U.S.
Bipartisan support: Bitwise Chief Investment Officer Matt Hougan stated that he believes the market underestimates the probability of successful passage of crypto market structure legislation. He pointed out that cryptocurrencies currently enjoy bipartisan support, crypto lobbying funds have reached historic highs, and so far, the government has been fulfilling its commitments to the crypto industry.
CLARITY Act: Bitwise Chief Investment Officer Matt Hougan believes that the likelihood of the CLARITY Act passing is quite high. This act aims to provide a clearer regulatory framework for cryptocurrencies.
- The Howey Test: The Legal Cornerstone of Digital Asset Classification
The Howey Test is a standard established by the U.S. Supreme Court in the 1946 Howey case to determine whether a transaction constitutes an "investment contract," and thus falls under the jurisdiction of federal securities law. The test includes four elements:
Monetary investment: Investors contribute money or other valuable assets.
Expectation of profits: Investors expect to earn profits from the investment.
Common enterprise: Investors' funds are pooled into a common enterprise.
Efforts of others: The generation of profits primarily or entirely depends on the management or entrepreneurial efforts of the promoter or a third party.
SEC Chairman Paul Atkins' "token classification framework" plan, based on the Howey Test, will help provide clearer guidance on the legal attributes of cryptocurrencies. He emphasized that cryptocurrencies can be part of an investment contract, but this does not mean they will always be so. This means that as the degree of decentralization of crypto projects increases, their legal attributes may also change accordingly.
- Impact on the Crypto Market: Regulatory Clarity and Accelerated Institutionalization Process
The "token classification framework" plan announced by the SEC Chairman will have a profound impact on the crypto market.
Regulatory clarity: Providing clear guidance on the legal attributes of cryptocurrencies will help reduce regulatory uncertainty and attract more institutional investors.
Accelerated institutionalization process: The enhancement of regulatory clarity will accelerate the institutionalization of cryptocurrencies, promoting their deep integration with the traditional financial system.
Innovation incentives: Clear rules will encourage innovation in crypto projects, allowing them to develop better within a compliant framework.
Investor protection: Clearly defining which cryptocurrencies are securities will help strengthen investor protection and prevent fraud.
Conclusion:
The "token classification framework" plan announced by SEC Chairman Paul Atkins is a key step for the U.S. in the field of digital asset regulation. This plan, based on the Howey Test, clearly distinguishes the legal attributes of "digital commodities," "digital collectibles," "digital tools," and "tokenized securities," and is expected to bring unprecedented regulatory clarity to the crypto industry. Against the backdrop of bipartisan support and legislative advancement, the institutionalization process of the U.S. crypto market will accelerate, and the healthy development of Web3 will welcome new opportunities.
Related Reading: Chinese "super villain" Qian Zhimin sentenced to 11 years and 8 months in London, the largest crypto money laundering case shakes the world.
Original article: “SEC Chairman Unveils Token Classification Framework Plan, Bitcoin (BTC) May Be Officially Recognized as Non-Security”
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