SEC-CFTC Joint Crypto Guidance: Analyzing the ‘Not an Endpoint’ Framework

Updated March 27, 2026 — The Securities and Exchange Commission and Commodity Futures Trading Commission have issued joint interpretive guidance on cryptocurrency regulation—their most significant coordinated action on digital asset classification to date. The agencies’ acknowledgment that their interpretation is “not an endpoint” signals that while this guidance establishes important regulatory baselines, the legal framework for crypto assets remains in flux.

[Editor’s Note: This analysis is based on initial reports and agency statements. CryptoLaw.blog is reviewing the full guidance documents and will update this article as our analysis develops. Last updated: March 27, 2026, 10:00 AM ET.]

Key Takeaways

• Coordinated federal action: The SEC and CFTC have jointly addressed the securities-versus-commodities classification question, signaling interagency alignment on foundational principles.
• Interpretive guidance, not binding rules: The guidance does not carry the force of law. Post-Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), courts will independently interpret the underlying statutes.
• “Not an endpoint” matters: This unusual language suggests the agencies anticipate evolution through rulemaking, legislation, or enforcement refinement.
• Compliance assessment warranted: Crypto exchanges, token issuers, DeFi platforms, and custodians should review operations against the framework.
• Litigation strategy implications: The guidance’s non-binding nature preserves defendants’ ability to challenge agency interpretations in enforcement proceedings.

What the Joint Guidance Addresses

Based on agency announcements, the SEC-CFTC joint guidance addresses the jurisdictional boundary between the agencies—specifically, when a digital asset constitutes a “security” subject to SEC oversight versus a “commodity” within CFTC jurisdiction.

This jurisdictional question has significant regulatory consequences:

• Securities classification triggers registration requirements under the Securities Act of 1933, 15 U.S.C. § 77e, and subjects intermediaries to broker-dealer and exchange regulations under the Securities Exchange Act of 1934.
• Commodities classification subjects derivatives to CFTC oversight and spot markets to the CFTC’s anti-fraud and anti-manipulation authority under 7 U.S.C. § 9(1).

The Howey Test Framework

Federal securities law defines “security” to include an “investment contract.” See 15 U.S.C. § 77b(a)(1). The Supreme Court established the test for investment contracts in SEC v. W.J. Howey Co.:

“[A]n investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

— 328 U.S. 293, 298-99 (1946)

The SEC has consistently applied Howey to crypto assets, arguing that tokens sold with expectations of profit based on the efforts of a development team or foundation satisfy the test. The agency articulated this position in its 2017 DAO Report, see Exchange Act Release No. 81207 (July 25, 2017), and has brought dozens of enforcement actions on this theory.

Courts have generally accepted the SEC’s application of Howey to initial token sales. However, the analysis becomes more complex for secondary market trading—a question that has produced inconsistent judicial treatment.

The Ripple Decision’s Impact

In SEC v. Ripple Labs, Inc., No. 20-cv-10832 (S.D.N.Y. July 13, 2023), Judge Analisa Torres held that XRP sales to institutional investors constituted securities transactions, but “programmatic sales” on exchanges to retail purchasers did not—because retail buyers did not know they were purchasing from Ripple and thus lacked the expectation of profits from Ripple’s efforts specifically.

This distinction created significant uncertainty. If a token can be a security in one transaction and not in another, how should exchanges, market makers, and investors analyze their obligations?

Whether and how the new SEC-CFTC guidance addresses the Ripple framework is a critical question we are working to clarify from the full documents.

What We Don’t Know Yet

Several significant questions require review of the complete guidance documents:

1. Secondary market treatment: Does the guidance adopt, reject, or modify the Ripple court’s transaction-by-transaction analysis?
2. DeFi-specific provisions: How does the guidance address decentralized exchanges, automated market makers, and governance tokens where no central “promoter” exists?
3. Staking and yield products: Does the guidance classify staking rewards or DeFi yields as securities, commodities, or something else?
4. Safe harbors: Does the guidance establish any bright-line tests or safe harbors that provide compliance certainty?
5. Existing enforcement impact: Does the guidance affect pending enforcement actions or provide any transition guidance?

CryptoLaw.blog will update this analysis as these questions are resolved.

Legal Weight of Interpretive Guidance

The characterization of this release as “interpretive guidance” has important legal consequences. Under the Administrative Procedure Act, agencies may issue guidance without notice-and-comment rulemaking, but such guidance:

• Does not have the force and effect of law
• Cannot impose legally binding obligations beyond existing statutory requirements
• May be challenged in court and receives no mandatory judicial deference

See 5 U.S.C. § 553(b)(A) (exempting interpretive rules from notice-and-comment requirements); Perez v. Mortgage Bankers Ass’n, 575 U.S. 92, 97 (2015) (explaining distinction between legislative rules and interpretive rules).

The Loper Bright Revolution

The legal significance of agency guidance changed dramatically with the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), which overruled Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

Under Chevron, courts deferred to reasonable agency interpretations of ambiguous statutes. Loper Bright eliminated this deference framework. Courts now exercise independent judgment on statutory meaning, considering agency interpretations only to the extent they have “power to persuade.” See Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).

For crypto regulation, this means:

1. Agency interpretations are challengeable — Defendants in SEC or CFTC enforcement actions can argue that the agency’s reading of “investment contract” or “commodity” exceeds statutory meaning, and courts will decide independently.
2. Guidance reliance provides no safe harbor — Following agency guidance does not immunize a party if a court later determines the guidance misinterprets the statute.
3. Persuasive value depends on reasoning — Guidance that provides thorough, well-reasoned analysis may still influence courts; guidance that merely asserts conclusions will carry less weight.

Why “Not an Endpoint” Matters

The agencies’ explicit statement that this guidance is “not an endpoint” is remarkable. Regulators typically present interpretations with confidence. This caveat suggests several possibilities:

Possibility 1: Formal Rulemaking Planned

The agencies may intend this guidance as a precursor to notice-and-comment rulemaking. Rules adopted through APA procedures carry greater legal weight than interpretive guidance, though they remain subject to judicial review.

Possibility 2: Congressional Action Anticipated

Multiple bills addressing crypto asset classification have been introduced in the 119th Congress. The agencies may be positioning their guidance as an interim measure pending legislative clarity. Congressional action could either codify or reject the agencies’ approach.

Possibility 3: Enforcement-Driven Refinement

The agencies may intend to refine their framework through enforcement actions and resulting litigation. This approach—sometimes called “regulation by enforcement”—has been the SEC’s primary crypto strategy since 2017, drawing significant criticism from industry participants and some members of Congress.

Possibility 4: Political Uncertainty

With the 2026 midterm elections approaching, agency leadership may recognize that future administrations could alter regulatory priorities. The “not an endpoint” language may reflect institutional awareness of political contingency.

Implications for Crypto Market Participants

Different market participants face distinct considerations under the new framework:

Crypto Exchanges

Exchanges must assess whether tokens they list are securities under the guidance’s framework. If they are, the exchange may need to:

• Register as a national securities exchange under 15 U.S.C. § 78e
• Operate as an alternative trading system under Regulation ATS, 17 C.F.R. §§ 242.300-303
• Partner with a registered broker-dealer

The SEC has brought enforcement actions against exchanges for operating unregistered exchanges, including actions against Coinbase, Binance, and Kraken. See, e.g., SEC v. Coinbase, Inc., No. 23-cv-4738 (S.D.N.Y.); SEC v. Binance Holdings Ltd., No. 23-cv-1599 (D.D.C.).

Token Issuers

Projects issuing tokens must evaluate whether their offering constitutes a securities offering requiring registration under 15 U.S.C. § 77e. Available exemptions include:

• Regulation D, 17 C.F.R. §§ 230.501-508 — Private placements to accredited investors
• Regulation A, 17 C.F.R. §§ 230.251-263 — Offerings up to $75 million with SEC qualification
• Regulation Crowdfunding, 17 C.F.R. Part 227 — Offerings up to $5 million through registered portals
• Regulation S, 17 C.F.R. §§ 230.901-905 — Offshore offerings to non-U.S. persons

DeFi Platforms

Decentralized finance protocols face particular uncertainty. The SEC has asserted that decentralized architecture does not exempt platforms from securities laws. The CFTC has asserted jurisdiction over DeFi derivatives, obtaining a default judgment against the bZx protocol operators in In re Ooki DAO, CFTC Docket No. 22-31 (Sept. 22, 2022).

Key questions for DeFi operators include:

• Whether sufficient decentralization eliminates the “efforts of others” prong of Howey
• Whether liquidity provision or yield farming constitutes a securities transaction
• Whether DAOs can be held liable as unincorporated associations

Custody Providers

Custodians must consider whether assets in their custody are securities subject to specific custody rules, including:

• SEC Rule 15c3-3, 17 C.F.R. § 240.15c3-3 (broker-dealer customer protection)
• Investment Advisers Act custody rule, 17 C.F.R. § 275.206(4)-2
• State money transmission requirements

Practical Implications: A Compliance Checklist

Market participants should consider the following steps in response to the new guidance:

Immediate Actions (Within 30 Days)

1. Obtain and review the full guidance documents — Do not rely on summaries or press reports alone.
2. Conduct a token-by-token analysis — Apply the guidance’s framework to each token you issue, list, trade, or custody.
3. Document your legal analysis — Contemporaneous documentation of good-faith compliance efforts may be relevant in enforcement proceedings.
4. Identify regulatory gaps — Note areas where your operations may not align with the guidance.

Medium-Term Actions (30-90 Days)

1. Assess litigation posture — Determine whether compliance with the guidance or challenge to agency authority better serves your interests.
2. Review existing legal opinions — Evaluate whether prior legal analyses remain valid under the new framework.
3. Engage counsel for risk assessment — Quantify enforcement exposure based on current operations and remediation options.
4. Monitor for rulemaking — If the agencies initiate notice-and-comment rulemaking, prepare substantive comments.

Ongoing Monitoring

1. Track enforcement actions — Agency enforcement patterns will reveal how the guidance is applied in practice.
2. Monitor litigation developments — Judicial decisions interpreting the guidance will shape its effective meaning.
3. Watch for Congressional action — Legislation could supersede or codify the regulatory framework.

Comparison to International Frameworks

The SEC-CFTC guidance arrives as major jurisdictions implement comprehensive crypto regulatory frameworks that take different approaches:

European Union: The Markets in Crypto-Assets Regulation (MiCA), Regulation (EU) 2023/1114, establishes a unified classification system distinguishing between e-money tokens, asset-referenced tokens, and other crypto-assets. MiCA does not apply the traditional securities analysis but creates bespoke categories.

United Kingdom: The Financial Conduct Authority regulates crypto assets under the Financial Services and Markets Act 2000 and related secondary legislation, treating some tokens as “specified investments” (similar to securities) while subjecting others to anti-money laundering requirements only.

Singapore: The Monetary Authority of Singapore regulates digital payment tokens under the Payment Services Act 2019 and securities tokens under the Securities and Futures Act, with relatively clear guidance distinguishing the categories.

For U.S.-based entities operating globally, the SEC-CFTC guidance creates potential for multi-jurisdictional compliance conflicts. A token classified as a security in the U.S. may be classified differently under MiCA, requiring parallel compliance frameworks.

Conclusion: Clarity Remains Incomplete

The SEC-CFTC joint guidance represents meaningful progress toward interagency coordination—a development the crypto industry has long sought. However, several factors limit the guidance’s ability to resolve regulatory uncertainty:

• The guidance’s non-binding character means courts will independently interpret the underlying statutes
• The “not an endpoint” language signals that the framework will continue evolving
• Significant questions about secondary markets, DeFi, and staking remain unclear pending full document review

Market participants should treat this guidance as an important input—but not the final word—on crypto compliance. Robust legal analysis, contemporaneous documentation, and ongoing monitoring remain essential.

CryptoLaw.blog will continue analyzing the guidance as additional information becomes available. Subscribe for updates.

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This article is for informational and educational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship. Laws and regulations in the cryptocurrency space change rapidly—consult a qualified attorney for advice specific to your situation and jurisdiction. Seth Goettelman is licensed to practice law in Wisconsin and Florida.