SEC (Securities and Exchange Commission)

The Securities and Exchange Commission is the primary US federal regulator of securities markets, established by the Securities Exchange Act of 1934 in the aftermath of the 1929 market crash. The SEC’s jurisdiction over crypto assets has been among the most contested and consequential regulatory questions in the digital asset industry, shaping how token issuers structure offerings, how exchanges operate, and how institutional tokenization programs are designed.

Jurisdictional Framework: The Howey Test

The SEC’s authority over any given crypto asset depends on whether that asset constitutes a security under federal law. The foundational analysis derives from SEC v. W.J. Howey Co. (1946), in which the Supreme Court defined an investment contract — and thus a security — as any investment of money in a common enterprise with an expectation of profits derived primarily from the efforts of others. This four-part test has been the SEC’s primary analytical tool for asserting jurisdiction over token sales.

The SEC’s long-standing position is that most tokens sold in public offerings satisfy the Howey test: investors commit capital (the investment of money), to a blockchain project (common enterprise), expecting price appreciation or yield (expectation of profits), generated by the founding team’s development work (efforts of others). The agency further developed the concept of a “token taxonomy” distinguishing functional utility tokens from investment contracts, while generally maintaining that the form of the instrument — digital token versus paper certificate — does not determine its legal classification.

The Gensler Era: Enforcement-First Approach (2021-2025)

Gary Gensler served as SEC Chair from April 2021 through January 2025 and pursued an aggressive enforcement-based approach to crypto regulation. Gensler repeatedly stated that the existing securities law framework was sufficient to regulate crypto assets and that most tokens were securities, rejecting industry arguments that legislation or new rulemaking was needed before enforcement could proceed.

Key enforcement actions defined the era. The SEC sued Coinbase in June 2023 alleging that it operated as an unregistered securities exchange, broker, and clearing agency by listing tokens the SEC deemed securities. The agency sued Binance the same month on similar grounds, adding allegations of fraud and misappropriation. The Ripple case, filed in December 2020 and producing a partial ruling in July 2023, resulted in Judge Analisa Torres finding that XRP sold programmatically on exchanges to retail buyers did not constitute securities transactions, while XRP sold directly to institutional buyers did — a ruling that cut against the SEC’s broadest jurisdictional claims and was not fully resolved on appeal before Gensler’s departure.

The Gensler SEC also brought enforcement actions against crypto lenders (BlockFi, Genesis, Nexo), NFT projects (Impact Theory), unregistered broker operations, and numerous token issuers. The agency’s refusal to approve spot Bitcoin ETFs until compelled by a federal court ruling in August 2023 drew particular criticism from the industry and from some commissioners.

The Atkins Era: Reform and Recalibration (2025-)

Paul Atkins was confirmed as SEC Chair in April 2025, bringing a markedly different philosophy toward crypto regulation. A former SEC commissioner and financial services industry consultant, Atkins had consistently criticized what he characterized as the prior administration’s overreach and regulation-by-enforcement approach.

In July 2025, the SEC launched Project Crypto, an internal initiative to develop a comprehensive framework for digital asset regulation. The project produced a series of staff guidance documents addressing token taxonomy, the conditions under which a token might transition from security to non-security status as a network decentralizes, and safe harbor proposals for token development periods. The SEC also proposed Regulation Crypto, a rulemaking designed to create tailored registration and disclosure requirements for digital asset issuers and trading platforms distinct from the traditional securities framework.

SEC-CFTC Jurisdiction Dynamics

One of the most enduring structural questions in US crypto regulation is the allocation of jurisdiction between the SEC and the CFTC. The SEC has historically maintained that the vast majority of tokens are securities and thus within its jurisdiction, while the CFTC has asserted that Bitcoin and Ether are commodities. Legislation including the CLARITY Act and the Financial Innovation and Technology for the 21st Century Act (FIT21) sought to define this boundary, generally giving the CFTC jurisdiction over spot markets for sufficiently decentralized digital commodities while preserving SEC jurisdiction over tokens associated with investment contracts. The ongoing resolution of this jurisdictional question significantly shapes the compliance obligations of token issuers and trading platforms.

Role in Tokenized Securities

For tokenized traditional securities — equities, bonds, fund interests, and structured products represented as digital tokens — the SEC’s jurisdiction is unambiguous: these instruments are securities regardless of their token form. The SEC’s Division of Corporation Finance and Division of Investment Management have both issued guidance addressing how existing requirements apply to tokenized securities, and the agency has worked with market participants through its LabCFTC-equivalent fintech engagement programs on specific tokenization use cases.