SEC Issues New Crypto Guidance as Market Structure Debate Intensifies

By Moish Peltz and Kyle Lawrence

Last month, the U.S. Securities and Exchange Commission released long-awaited interpretive guidance addressing how existing securities laws apply to digital assets and tokenized instruments. The document arrives at a pivotal moment, as regulators, lawmakers, and market participants continue to grapple with how to classify and regulate crypto assets within the existing legal framework. For industry participants, the guidance offers a clearer window into how the SEC is currently thinking about tokenization, investment contracts, and the application of federal securities laws, while also highlighting the limits of what agency interpretation alone can accomplish.

The release has drawn attention across the legal and crypto communities, including from practitioners like Lee Schneider, General Counsel at Ava Labs, who has spent years advocating for more precise legal analysis in this area. On a recent episode of our podcast Block & Order, hosted by Moish Peltz and Kyle Lawrence, Schneider emphasized the importance of grounding regulatory analysis in the underlying characteristics of an asset.

“My thesis has always been that oranges are not securities,” Schneider said. “For me, the nature of the asset is what matters.”

That perspective, developed well before the SEC’s latest release, provides a useful lens for understanding both what the guidance accomplishes and where it leaves open questions.

What the SEC’s New Guidance Clarifies

The SEC’s interpretive release focuses on how traditional securities concepts apply when assets are represented on blockchain infrastructure, whether they be crypto native or are real-world assets. In particular, it addresses how tokenization interacts with existing categories of financial instruments and how different structures can lead to different regulatory outcomes.

One of the most notable aspects of the guidance is its emphasis on the structure of the rights associated with a token. A token that represents an interest in an underlying asset may be treated differently depending on how those rights are defined and conveyed. In some cases, the structure may resemble familiar financial instruments, such as options or swaps, which can carry distinct regulatory implications. This approach reflects a more granular analysis than earlier enforcement-driven interpretations, requiring market participants to carefully evaluate how their products are designed.

The guidance also underscores that tokenization introduces additional layers of legal complexity rather than simplifying regulatory obligations. Representing an asset on a blockchain can affect how it is transferred, how ownership is recorded, and how rights are exercised. Each of these factors may influence how the asset is treated under securities laws, particularly when combined with expectations about profit or reliance on third parties. Namely, asset issuance is just one transaction that regulators will scrutinize — secondary and tertiary transactions can change whether securities laws apply if an investment contract is introduced. 

For compliance teams, the practical implication is that classification cannot be treated as a one-time exercise. It must account for how the asset functions in practice, how it is offered, and how it evolves over time.

Lee Schneider’s View in Context

Schneider’s comments on Block & Order help contextualize the SEC’s approach, though his views were not developed in response to the guidance itself. His position — that legal analysis should begin with the nature of the asset and the rights it represents — has been consistent across prior discussions and advocacy efforts. In each transaction, “we need to understand what the underlying subject matter of the investment contract is,” he explained.

The SEC’s guidance reflects a similar emphasis on analyzing the structure and characteristics of tokenized assets, but it stops short of resolving many of the broader classification challenges that Schneider and others have identified. His perspective does not change in light of the guidance; rather, the release reinforces aspects of the analysis he has been advocating for, particularly the importance of focusing on the underlying rights and obligations embedded in a token.

At the same time, Schneider has been critical of how securities laws have historically been applied in the crypto context, particularly when interpretations stretch beyond the core concept of an investment contract.

“What’s been hard is convincing people to give a diligent application of the law as opposed to trying to use the Howey Test to shoehorn anything they want into the definition of investment contract,” he said. The SEC’s latest guidance appears to move toward a more disciplined application, though it remains grounded in existing statutory authority.

The Remaining Gaps: Why Legislative Action Still Matters

Even with clearer interpretive guidance, significant questions remain about how digital assets should be classified and regulated in the United States. The SEC’s authority is limited to applying existing securities laws, which were not designed with decentralized networks or tokenized assets in mind. As a result, the guidance provides direction without fully resolving areas where digital assets fall outside traditional categories.

Schneider addressed this limitation directly, emphasizing the role Congress must play in creating a more comprehensive framework. “I fervently hope that we get market structure legislation to clarify this,” he said. “This is a pretty greenfield opportunity for Congress.”

Congress has the ability to define new categories of digital assets, clarify jurisdictional boundaries between agencies, and establish rules tailored to the unique characteristics of blockchain-based systems. Without that level of clarity, market participants must continue to interpret guidance alongside evolving enforcement priorities and judicial decisions.

The result is a regulatory environment that is more informed than it was a year ago, but still incomplete. Guidance can shape how laws are applied, but it cannot fully address the structural questions raised by assets that do not fit neatly within existing definitions.

What This Means for Crypto Businesses

For companies operating in the digital asset space, the SEC’s guidance provides a clearer starting point for analyzing tokenized products and compliance obligations. It encourages a more detailed examination of how assets are structured and how rights are conveyed, which can help reduce uncertainty in certain contexts.

At the same time, the broader regulatory landscape continues to evolve. Businesses must balance current guidance with the possibility of future legislative changes and ongoing agency rulemaking. Engaging with policymakers and staying attuned to developments in market structure legislation will remain critical.

If your company is assessing how the SEC’s latest guidance affects your tokenization strategy, product design, or regulatory posture, the digital asset team at Falcon Rappaport & Berkman can help. Kyle Lawrence and Moish Peltz work closely with clients to navigate emerging frameworks and prepare for the next phase of digital asset regulation. Reach out to FRB Law to ensure your strategy reflects both current guidance and where the law is headed.