U.S. SEC, CFTC issue joint interpretation classifying bitcoin, ether, XRP as non-securities
The U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have released a joint interpretation that classifies bitcoin, ether, and XRP as assets that are generally not considered securities.
Blockchain media outlet CoinPost reported on Monday that CFTC Commissioner Michael Selig introduced a draft set of cryptocurrency trading rules containing this interpretation during a symposium held Sunday at Fordham University School of Law in New York.
The primary regulatory framework. The CFTC outlined a plan to establish a new registration category, termed a “crypto market,” specifically for exchanges that facilitate these types of trades. Additionally, the CFTC began a public comment period for a regulatory framework covering retail commodity trading, including cryptocurrencies. Submissions are due within 60 days of the proposal’s publication in the Federal Register.
Selig categorized exchanges into three distinct stages. He defined general spot exchanges as stage 1, subject to state money-transmission licensing rules; exchanges offering retail trading with margin, leverage, and lending as stage 2; and exchanges handling derivatives like perpetual futures as stage 3. The proposal is focused on stage 2 businesses. For entities already registered as designated contract markets with the CFTC, stage 3 businesses would be permitted to offer such trading under modified rules, while unregistered businesses would have the option to choose between a general designated contract market or the new registration category.
Selig stated that this framework represents a federal option based on existing authority rather than new congressional legislation. “Exchanges can choose whether to opt for a state license or federal registration,” he said. “The only entity that can mandate registration for all exchanges is Congress,” he said. He further noted that while Congress has already mandated CFTC registration for retail trading involving margin, leverage, and lending, the CFTC has historically addressed this primarily through enforcement actions rather than specific rules.
A key focus for the markets is the standard used to determine which cryptocurrencies fall under this regulation. Referencing the joint interpretation compiled by the CFTC and SEC this year, Selig explained that three categories—digital commodities, digital collectibles, and digital tools—do not qualify as securities in principle. He cited bitcoin, ether, XRP, Solana, Stellar, and Tezos as examples of digital commodities whose value is derived from programmatic operation or supply and demand.
The new registration category also introduces controls for the listing process. Exchanges are required to demonstrate at the time of listing that an asset is not susceptible to price manipulation. The plan further includes a proof-of-reserves requirement for exchanges that hold customer assets in omnibus accounts. Consequently, federal regulators would oversee both listing reviews and custody procedures.
The proposal also seeks to clarify crypto delivery standards within the rules. Selig noted that for “actual delivery” within 28 days—which is recognized as an exception to the on-exchange trading requirement under the Commodity Exchange Act—transferring cryptocurrency to a user’s external non-custodial wallet would, in principle, be interpreted as meeting the requirement. This implies that a structure where users receive assets directly into a wallet outside of the exchange would be considered physical delivery under the system.
In this context, U.S. regulators suggested prioritizing the overhaul of retail trading that combines leverage and lending, rather than forcing all crypto spot trading into a blanket federal registration requirement. By identifying major cryptocurrencies such as bitcoin, ether, and XRP as examples within the non-security category, they have established a baseline for future discussions regarding exchange registration, listing reviews, and custody regulations.
