The U.S. Securities and Exchange Commission (SEC), in a joint effort with the Commodity Futures Trading Commission (CFTC), issued new guidance on March 19, 2026, aimed at clarifying how securities laws apply to digital assets. While the guidance acknowledges that the previous "regulation by enforcement" campaign under former Chair Gary Gensler had muddied compliance obligations and stifled the industry, legal experts from firms like Gibson, Dunn & Crutcher warn that it stops short of providing the definitive clarity the crypto sector desperately needs.
The core deficiency lies in the SEC's articulation of the Howey test for determining what constitutes an "investment contract" security. The guidance reiterates that most digital assets are not, on their own, investment contracts. However, it fails to clearly state whether an investment contract requires contractual obligations between issuer and investor. Instead, it maintains a subjective "facts and circumstances" approach, stating an investment contract exists when a developer induces an investment with "representations or promises to undertake essential managerial efforts," leading purchasers to "reasonably expect to derive profits."
This approach, critics argue, leaves too much room for interpretation and does not represent a clean break from the Gensler-era view. It allows the agency—or private plaintiffs—to piece together an "investment contract" from various public statements like tweets, white papers, and marketing materials, even absent concrete promises from issuers. The new guidance does impose some guardrails, requiring a developer's representations to be "explicit and unambiguous" and to occur before purchase, but experts contend this is insufficient.
A major area of continued ambiguity is the treatment of secondary-market trading. The SEC now recognizes that digital assets are not investment contracts "in perpetuity" just because they once were subject to them. However, it states that assets remain "subject to" investment contracts on secondary markets so long as purchasers "reasonably expect" issuers' promises to remain connected to the asset. The guidance provides little detail on assessing these expectations and says nothing about whether a secondary-market purchaser must have a contractual relationship with the issuer.
Legal experts point to the precedent set in SEC v. Ripple Labs, where Judge Analisa Torres distinguished between institutional sales (deemed securities) and programmatic sales on exchanges. The ruling suggested that "blind bid-ask" transactions, where counterparties don't know each other's identities, are unreasonable contexts for inferring an investment contract. The SEC's latest guidance fails to clearly endorse or integrate this judicial analysis, perpetuating confusion over a token's status after its initial sale.
The persistent lack of clarity has tangible consequences: developers may hesitate to launch new networks, exchanges might preemptively delist assets, and institutional adoption remains cautious. This regulatory uncertainty risks ceding U.S. leadership in blockchain technology to jurisdictions with clearer frameworks, like the European Union under its MiCA regulation.
The SEC has invited comments on its guidance, and the legal community is urging the industry to provide robust feedback. The call is for the SEC to move beyond guidance to formal rulemaking, establishing bright-line tests and safe harbor provisions to ensure regulatory clarity and stability, rather than continuing a regime of regulation by enforcement.
