SEC Considers Token Taxonomy Under Howey

SEC to Develop Token Taxonomy Under Howey Framework

• The SEC is working on a new token taxonomy to clarify which crypto assets are considered securities, based on the Howey investment contract framework.
• Four categories will be outlined: digital commodities, collectibles, tools, and tokenized securities.
• SEC Chairman Paul Atkins stated that most crypto tokens are not securities but may have been sold as part of an investment contract.
• Tokens initially sold as securities might lose that status if a project becomes decentralized or the issuer’s role ends.
• The guidelines aim to balance regulation with innovation, collaborating with the CFTC and other regulators for non-security assets.

The SEC’s upcoming token taxonomy will categorize crypto assets to determine their regulatory status. This initiative seeks clarity in distinguishing between non-securities and tokenized securities under existing frameworks.