The SEC and the CFTC published a joint interpretation on 17 March 2026 that settles, at agency level, a question the crypto industry argued about for a decade: which crypto assets are securities. In the same tax season, brokers began issuing the first Form 1099-DA statements covering 2025 transactions. If your compliance habits were built on 2023-era blog posts, both events change what you should actually do.
This piece covers three things. First, the five-category test the agencies now use, and what it does not settle. Second, what Form 1099-DA will and will not contain. Third, where to check every claim here yourself, including the ones about ongoing litigation.
The Commission issued the interpretation as Release Nos. 33-11412 and 34-105020 under File No. S7-2026-09. It appeared in the Federal Register on 23 March 2026 as document 2026-05635 and took effect that day. The CFTC joined the release and stated that it will administer the Commodity Exchange Act consistently with the SEC's conclusions, which matters because a non-security crypto asset can still be a commodity under CFTC oversight.
Chairman Paul S. Atkins described the document as recognition that "most crypto assets are not themselves securities." CFTC Chairman Michael S. Selig called it the end of a long wait for guidance. Those are agency statements about agency policy, and you should read them as such.
The release does three concrete things. It sets out a token taxonomy of five categories. It explains how a crypto asset that is not itself a security can become subject to an investment contract, and how it can stop being subject to one. And it addresses four activity types that had no clear answer: airdrops, protocol mining, protocol staking, and the wrapping of a non-security asset.
What it does not do is bind a court. An interpretation states the Commission's view of existing law. The Commission itself reaffirms that the economic-realities test from SEC v. W.J. Howey Co., 328 U.S. 293 (1946), governs the investment contract question, and the document does not claim to displace judicial precedent. If a dispute reaches a judge, both sides will still argue Howey. Treat the taxonomy as the SEC's stated position, which is very useful, not as a safe harbour written into statute.
The interpretation sorts crypto assets by characteristics, use and function rather than by ticker. Only one of the five categories is a security by definition.
| Category | Is the asset itself a security? | What drives the answer |
|---|---|---|
| Digital commodities | No | Value derives from a functioning crypto system's programmatic operation and supply and demand, not from another party's managerial efforts |
| Digital collectibles | No | Collected or used for creative or cultural content; value reflects scarcity and popularity. Fractionalised structures can still create an investment contract |
| Digital tools | No | Practical function such as membership, tickets or identity credentials; consumed rather than held as an investment |
| Stablecoins | Depends on the asset and the statute | The GENIUS Act excludes a payment stablecoin issued by a permitted payment stablecoin issuer; separately, the staff's covered stablecoin position applies. Other stablecoins are not addressed |
| Digital securities | Yes | A financial instrument enumerated in the securities definition, represented onchain. Format and label do not change the answer |
Two cautions matter more than the table itself. Every classification is a facts-and-circumstances test, and a token can straddle categories or show hybrid features. And the category describes the asset, not the deal you were sold.
One historical marker helps calibrate how far this has moved. When the SEC approved spot bitcoin exchange-traded products in January 2024, it described bitcoin as a non-security commodity in the approval order. That was the first product-specific agency action placing bitcoin outside the securities framework, and the interpretation now generalises the reasoning behind it.
This is the part most summaries skip. An asset that is not itself a security can still be offered inside an investment contract, which means the securities laws attach to the transaction even though the token sits in a non-security category. Under Howey, that requires an investment of money in a common enterprise with a reasonable expectation of profits from the efforts of others.
The 2026 interpretation adds the reverse path. An investment contract can end. A crypto asset that was originally sold as part of one may cease to be subject to it once a buyer can no longer reasonably view the issuer's representations and promises as still attached to the asset. That can happen because the promises were fulfilled, or because the project failed and there is nothing left for purchasers to rely on.
The Commission directs attention to four things when judging whether a reasonable expectation of profit exists: where the representations came from, when they were made, the medium used, and the level of detail. Representations that are vague, or that carry no actionable business plan with milestones, funding or a plan for resources, are unlikely to create that expectation.
Before you assume a token's category settles your question, work through these:
A yes on the first two, with a no on the third, is the combination that historically produced enforcement exposure. A no on all four is the profile the taxonomy was written for.
Three different things get flattened into one word, "crackdown," in most coverage: an enforcement charge, a court judgment, and a settlement that was proposed but never approved. They have completely different legal weight, and the highest-profile case of the last five years shows why the distinction matters.
| Matter | Current status | Source you can read |
|---|---|---|
| SEC v. Ripple Labs (1:20-cv-10832, S.D.N.Y.) | Final judgment of 7 August 2024 stands, including a civil penalty of $125,035,150 and an injunction. The parties' appeals were dismissed on 7 August 2025 by joint stipulation in the Second Circuit (Nos. 24-2648(L), 24-2705(XAP)) | SEC Litigation Release No. 26369 (7 Aug 2025); No. 26306 (8 May 2025) |
| SEC v. Coinbase | Dismissed with prejudice on 27 February 2025 by joint stipulation. A stipulated dismissal is not a ruling on the merits either way | SEC Press Release 2025-47 |
| FY2025 crypto docket | The Commission's FY2025 enforcement results release records seven crypto-related dismissals over the fiscal year, including Consensys, Payward (Kraken), Cumberland DRW, Dragonchain, Balina and Binance | SEC Press Release 2026-34 |
Here is the trap. On 8 May 2025 the parties filed a proposed settlement that would have reduced Ripple's penalty to $50 million and dissolved the injunction. Litigation Release No. 26306 documents it. A court never approved that agreement, so it never took effect. When the appeals were later dismissed, the SEC stated plainly that the final judgment would remain in force.
So the number that governs is $125,035,150, with the injunction intact. The $50 million figure continues to circulate in secondary coverage because the filing is public and easy to find, and because reading a filing is easier than reading the docket to see what happened to it. If you take one verification habit from this article, take that one.
The Coinbase line deserves the same care. Dismissal with prejudice by joint stipulation ends the case and prevents refiling, and it also means no court decided whether the exchange's listings were securities transactions. Anyone citing it as proof that the SEC was wrong about the underlying question is reading a procedural outcome as a substantive one.
The reporting regime comes from Treasury Decision 10000, published at 89 FR 56480 on 9 July 2024 and effective 9 September 2024. It created Form 1099-DA, Digital Asset Proceeds From Broker Transactions, and phased the obligations in over two years. It covers custodial models: trading platforms, hosted wallet providers, kiosks and certain payment processors. It did not finalise reporting obligations for non-custodial or decentralised brokers.
"Covered" versus "noncovered" is the distinction that will catch people out. Digital assets acquired and held inside a broker account from 1 January 2026 are covered, and the broker tracks basis. Assets you already held at that date, or transferred in from a self-hosted wallet, are noncovered. The broker is not required to know what you paid for those, and you remain the one who has to produce the number.
Six transaction types are also parked. Notice 2024-57 says brokers need not file Forms 1099-DA or furnish statements for wrapping and unwrapping, liquidity provider transactions, staking transactions, transactions described as lending of digital assets, transactions described as short sales, and notional principal contracts, until Treasury and the IRS issue further guidance. The exception does not extend to rewards or other compensation you earned from participating in those transactions, so the income side is unchanged.
Revenue Procedure 2024-28 handles the transition problem this creates. It lets you allocate units of unused basis across the digital assets held in each wallet or account as of 1 January 2025. The practical consequence is that basis tracking is now wallet-by-wallet rather than pooled across everything you own, and 1 January 2025 is the line where that method starts.
One more point that gets misread. The relief in Notice 2024-56 and Notice 2025-33 runs to brokers: good-faith penalty relief for 2025 filings, and transition relief from backup withholding. None of it reduces what you owe or what you must report. A missing or late form is not permission to leave a disposition off your return.
For 2025 dispositions the form carries proceeds and little else. Everything that turns a proceeds figure into a gain or a loss has to come from your own files.
The value of keeping this is concrete. When a 1099-DA arrives showing proceeds with no basis, the gap is not the broker's error. It is the part you were always responsible for, and it now arrives in a form the IRS can match automatically against your return.
Every claim above has a primary source, and each one is on a government site you can open without an account.
Reading a taxonomy and filling in a form are different problems. Go to a qualified tax or securities professional, not a forum, if any of these apply:
The single action worth taking today is boring and cheap: export full transaction history from every exchange and wallet you used in 2025, and store the raw files somewhere you will still find them in three years. Everything else in this article depends on that dataset existing.
This article is general information about published agency positions and IRS reporting rules, not legal, tax or investment advice. Rules change, and the interpretation discussed here states the Commission's view rather than binding any court. Verify against the primary sources cited before acting.