What the SEC's new token taxonomy means for crypto founders

For years, launching a token in the U.S. raised uncertainty: Is it a security? Will we face enforcement? Should we even launch?

The U.S. Securities and Exchange Commission (SEC) 's new token taxonomy doesn't make those questions disappear. However, it gives founders a clearer map to work from. This article summarizes that framework in plain terms. This is just a starting point and should not be considered as legal advice.

Why this matters now

The SEC released an interpretive framework. The Commission itself describes it as a first step, which may be refined or expanded over time. That's worth keeping in mind as you read. But even as a first step, it's significant: for years, the industry operated under what many described as "regulation by enforcement," with little formal guidance on how existing securities laws applied to crypto assets. This changes that, at least partially.

5 token categories

The SEC classifies crypto assets into five categories based on how they function, what rights they confer, and how their value is generated. Here's what each one means in practice.

Digital commodities are tokens tied to functional, decentralized networks — assets whose value comes from how the network is used, not from anyone's managerial efforts on behalf of holders. The SEC provides a fairly long list of examples, including Bitcoin, Ether, Solana, XRP, Dogecoin, Cardano, and others. These tokens are used for things like transaction fees, staking, and network participation. They don't give holders rights to profits, income streams, or ownership in any enterprise. Under the conditions described in the framework, they are not securities.

Digital collectibles cover NFTs, meme-based assets, and similar tokens created for cultural, artistic, entertainment, or community purposes. Their value is determined by market demand rather than by any actions taken by the issuer on behalf of holders. As long as there's no reasonable expectation of profit tied to someone else's managerial efforts, these generally fall outside securities classification too.

Digital tools are tokens that perform a practical function, like memberships, credentials, access tickets, or identity instruments. The SEC's own examples include ENS (Ethereum Name Service) domain names and NFT-based event credentials. People buy these to use them, not to invest in them, which is why they don't carry the economic characteristics of a security.

Stablecoins are the most legally complex category, and the framework treats them accordingly. Whether a stablecoin is a security depends heavily on its structure: how it's backed, whether holders can earn yield from it, and whether the issuer qualifies under the recently enacted GENIUS Act's definition of a "permitted payment stablecoin issuer." There’s no single answer. It depends on the facts and is still evolving.

Digital securities are straightforward: tokens that represent equity, debt, profit-sharing arrangements, or investment contracts are securities, regardless of their format or what they're called. This category is one most founders want to avoid unless they're building something intentionally structured as a regulated financial instrument.

The critical insight most founders miss

Even if your token falls into a non-security category, the SEC is clear that how you offer and sell it matters enormously. A digital commodity doesn't become a security by itself. Pair it with explicit promises about what your team will build, a roadmap tied to investor returns, and a whitepaper that reads like a pitch deck, and you may have created an investment contract regardless of what the token technically is. This has always been the logic of the Howey test, and the new framework reinforces it rather than replacing it.

What this means for your startup

The taxonomy creates design clarity while leaving regulatory risk in place. You now have a structured framework to test your token concept against — one that the SEC has formally committed to applying consistently. The question worth asking is whether your token's actual function, and the way you communicate it, genuinely aligns with one of the non-security categories. Real utility should drive design decisions instead of serving as superficial framing for a speculative launch.

The inclusion of Bitcoin, Ether, Solana, XRP, and others as named digital commodities is also a meaningful signal. It establishes a reference point for what compliant, decentralized network tokens look like. For founders, this is a reference point for what compliant design can look like.

Build it right from day one

At Consider It Done Technologies (CIDT), we help crypto founders design token architectures that align with SEC guidance, map their use cases to the right regulatory categories, and identify securities risks before they become problems. If you're thinking about launching a token and want to get the structure right from the start, we'd like to talk.

👉 Consult with CIDT on your token architecture

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