SEC Chair Drops Bombshell: Majority of Crypto Tokens Are Not Securities

Regulatory clarity finally hits crypto—and Wall Street's compliance departments just got a whole lot lighter.

The Howey Test Gets a Digital Makeover

SEC Chair Gary Gensler just drew a line in the sand that's sending shockwaves through traditional finance. Most digital tokens don't qualify as securities under current frameworks—a stance that effectively bypasses years of regulatory ambiguity. Market participants are scrambling to reposition portfolios while compliance teams face existential questions about their relevance in this new paradigm.

Tokens versus Traditional Assets

This isn't just semantics—it's a fundamental reshaping of how we classify value in the digital age. Unlike stocks or bonds, these tokens operate on decentralized networks without centralized promoters. The distinction cuts through regulatory gray areas that have kept institutional money on the sidelines. Suddenly, crypto exchanges look less like gambling dens and more like legitimate marketplaces—though some Wall Street veterans would argue the difference is negligible.

Implications for the Digital Economy

Expect a flood of institutional capital as asset managers rush to capitalize on the clarity. Blockchain projects can now build without the constant threat of enforcement actions looming over their tokenomics. The move effectively legitimizes entire sectors of the digital asset space overnight—from DeFi protocols to NFT platforms. Traditional securities lawyers might need to retrain as smart contract auditors to stay employed.

Of course, this regulatory gift comes just in time for finance bros to finally justify their ape-themed NFT portfolios as 'strategic investments' rather than degenerate gambles.

SEC Chair Paul Atkins has suggested that only a small number of crypto tokens should be considered securities, adding that a token by itself is “probably not” a security. He introduced “Project Crypto,” an SEC initiative designed to update securities laws and move U.S. markets on-chain. Atkins emphasized the need for a clear framework to keep the crypto industry innovative while protecting it from unnecessary or harmful regulatory interference, aiming to future-proof digital asset markets.