On March 17, 2026, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly released a landmark interpretation providing comprehensive guidance on how federal securities laws apply to crypto assets and transactions involving crypto assets. This is the first time these two agencies have jointly addressed the regulatory classification of crypto assets, building on a collaboration announced in January 2026 under the banner of “Project Crypto.”
This represents a significant shift from the SEC’s prior “regulation by enforcement” approach, under which the agency pursued enforcement actions against participants in the crypto market without providing clear rules in advance. The interpretation is intended to reduce uncertainty by providing a coherent framework to help businesses determine when a crypto asset is – or is not – a security under federal law.
For Israeli companies and investors active in the blockchain and crypto industry, this development is particularly significant: Israel has become a hub for blockchain innovation, and many ventures involving Israelis have material exposure to U.S. markets, U.S. investors, or U.S.-listed tokens – making U.S. regulatory clarity on crypto asset classification relevant to their legal risk, fundraising strategy, and compliance obligations.
Key Definition: What the Regulators Said
At the heart of the interpretation is a new taxonomy that classifies crypto assets into five categories, each analyzed under the statutory definition of “security” and the well-known “Howey test” – the legal standard courts use to determine whether something qualifies as an “investment contract” (and therefore a security). The Howey test asks whether there is (1) an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profits derived from the efforts of others.
The five categories are:
- Digital Commodities – Not Securities. These are crypto assets associated with a functional blockchain system and deriving their value from its operation and from market supply and demand – rather than from the managerial efforts of any company or promoter. For the first time, the regulators provide examples of existing coins, including Bitcoin, Ether, Solana, XRP, Cardano, and Dogecoin. Although these assets are not treated as securities, the CFTC noted that they may fall within the definition of a “commodity” or “good” under the legislation governing such matters.
- Digital Collectibles – Not Securities. These are crypto assets designed to be collected or used, representing things like artwork, music, trading cards, in-game items, or meme coins. Their value comes from cultural significance, scarcity, and demand – much like physical art or sports memorabilia.
- Digital Tools – Not Securities. These are crypto assets that perform a practical function, such as a membership pass, event ticket, credential, or identity badge. People acquire them for their utility, not as investments.
- Stablecoins – Depends on the Type. “Payment stablecoins” issued by approved issuers under the GENIUS Act will not be considered securities once that law takes effect. Other stablecoins may or may not qualify as securities depending on their specific terms.
- Digital Securities – Are Securities. These are traditional financial instruments (like stocks or bonds) that have been “tokenized,” meaning their ownership is recorded on a blockchain, and the token embodies the associated rights or value. They carry the same regulatory obligations as conventional securities, regardless of their digital format.
What This Means in Practice
This interpretation provides important clarity regarding everyday crypto activities, particularly as to when an activity may be treated as a securities transaction:
- Buying and holding major cryptocurrencies. Purchasing Bitcoin, Ether, or Solana on an exchange is not, by itself, a securities transaction. These assets are classified as digital commodities and fall outside the SEC’s jurisdiction, though they may be subject to CFTC oversight.
- Launching or trading NFTs and meme coins. Creating and selling a digital art collection (such as CryptoPunks) or a meme coin (such as Dogecoin or WIF) generally does not trigger registration requirements under securities laws, provided that the creator does not make promises regarding future profits linked to the creator’s managerial efforts. However, the sale of fractionalized interests in a single NFT may cross the line into securities territory, depending on the structure and circumstances.
- Staking and mining crypto. Participating in blockchain validation – whether through proof-of-work mining or proof-of-stake staking – is not a securities transaction, even when using third-party service providers, custodians, or liquid staking protocols.
- Token launches with development promises. If a project team sells tokens alongside promises to build out a platform, achieve technical milestones, or deliver profits, that sale likely involves an “investment contract” – a security – requiring registration or an exemption. Critically, however, the token can “separate” from that investment contract once the team fulfills its promises or the project is abandoned, at which point the token itself is no longer treated as a security.
- Airdrops. Distributing free tokens to wallet holders without requiring anything in return is generally not a securities transaction because there is no “investment of money.”
Conclusion
This joint SEC-CFTC interpretation represents the most significant step toward regulatory clarity for the U.S. crypto industry to date. By establishing a clear taxonomy and addressing common activities like staking, mining, wrapping, and airdrops, the regulators have provided a workable framework that should reduce legal uncertainty and compliance costs for businesses operating in this space. That said, the framework remains subject to refinement, and companies should proactively assess how these developments affect their operations.
Relevance to Israeli Law and Regulation
While the joint interpretation discussed above is a product of U.S. law and reflects the application of U.S. federal securities statutes, it carries meaningful implications for Israeli market participants, legal practitioners, and regulators.
The Howey Test has long served as a foundational reference point in Israeli securities regulation and regulatory thinking. Israeli regulatory bodies, including the Israel Securities Authority (ISA), have in past reports and guidance documents expressly referenced the Howey Test and its application in U.S. case law as a basis for interpreting the definition of a “security” under the Israeli Securities Law, 5728-1968. In particular, the ISA’s 2019 report on distributed ledger technology and digital assets drew heavily on the Howey framework in analyzing whether digital tokens constitute securities under Israeli law, reflecting the Israeli regulatory tradition of looking to U.S. securities law doctrine as persuasive authority.
We expect that the SEC and CFTC’s joint interpretation – and in particular, its five-category taxonomy for classifying crypto assets – will serve as an important reference point for future Israeli regulatory guidance and case law. Accordingly, Israeli market participants, token issuers, service providers and exchanges should study this interpretation carefully, not only because of its direct impact on U.S.-facing activities, but also as a preview of the analytical framework that Israeli regulators and courts may adopt in the near future.
Israeli companies and investors that are active in the digital asset space—whether as token issuers, platform operators, fund managers, or traders—should assess their activities in light of both the existing Israeli regulatory framework and the evolving U.S. framework described above, as the two are likely to converge over time.
We continue to monitor closely the significant developments in this area and would be pleased to assist anyone affected by the new interpretation.
The above content is a summary provided for informational purposes only and does not constitute legal advice. It should not be relied upon without obtaining further professional legal counsel.
