SEC Unveils Four-Tier Token Classification, Replacing Blanket Crypto Rules

On November 13, the SEC chair announced a sweeping crypto regulation overhaul with a four-tier token classification system. The new SEC token classification divides crypto assets into network tokens, digital collectibles, digital utilities and tokenized securities. Most tokens—such as decentralized network tokens, NFTs and utility tokens—will fall outside securities law, while tokenized securities remain subject to SEC oversight. The framework also updates the Howey test interpretation, recognizing that an investment contract can terminate once issuer promises are fulfilled. Tokens that mature beyond their initial investment contract won’t automatically remain securities under the revised token classification. Future measures include tailored issuance regimes and permission for non-security tokens to trade on non-SEC platforms, all under existing anti-fraud provisions. This crypto regulation update aims to reduce uncertainty, protect investors and keep innovation in the U.S., supporting pending congressional market-structure legislation.