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In a landmark shift for U.S. crypto regulation, U.S. Securities and Exchange Commission (SEC) Chair Paul S. Atkins announced on November 12, 2025, the introduction of a new token taxonomy designed to distinguish when crypto-assets qualify as securities and when they do not.
At the Fintech Conference hosted by the Federal Reserve Bank of Philadelphia, Atkins declared that “most crypto tokens trading today are not securities.” He laid out a three-part approach: the importance of a clear taxonomy, a re-application of the historic SEC v. W. J. Howey Co. “Howey” investment-contract test in the digital-asset context, and practical implications for innovators, intermediaries and investors.
What the Token Taxonomy Means
The proposed framework offers a structured way to view digital assets:
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Tokens that are truly decentralized, functional network tokens (sometimes called “digital commodities” or “network tokens”) may be treated as non-securities, provided their value is not tied to the managerial efforts of others.
Other categories such as digital collectibles, or digital tools/membership tokens could also fall outside the securities box, depending on how they function.
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Meanwhile, tokens that represent investment contracts (i.e., where value comes from the efforts of others) will remain subject to securities regulation but crucially, Atkins emphasized that a token’s status can evolve. Just because a token started as part of a securities offering doesn’t mean it must remain a security forever.
Atkins told attendees: “Investment contracts can end, and networks can stand on their own merits.”
Why This Matters for Crypto Markets
The lack of clear classification has long weighed on the crypto industry. Many tokens faced uncertaintyare they securities, which require heavy registration and oversight, or commodities/other assets with lighter regulation? The new taxonomy is meant to replace the “blanket assumption” that every token is a security.
For developers, exchanges and investors, this means greater clarity:
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Projects may now map their token model against categories under the taxonomy to assess regulatory treatment.
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Tokens that evolve becoming more decentralised or moving away from reliance on an issuer’s efforts may transition out of securities status under this framework.
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The SEC emphasises this is not a deregulation of crypto: enforcement of fraud, manipulation and false statements remains robust.
How It Relates to Legislative Moves & Regulatory Cooperation
Atkins flagged that the taxonomy complements ongoing Congressional efforts to define crypto market-structure legislation. He also noted cooperation with the Commodity Futures Trading Commission (CFTC) and states may play roles for non-security tokens.
In other words, the SEC under Atkins is repositioning its oversight: remaining central for securities-type tokens, but more open to non-security categories being regulated under alternative regimes.
Key Takeaways for Stakeholders
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Token issuers: Must assess whether their token model relies on promises of profit from others’ efforts (Howey test) or functions as part of a decentralized network.
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Exchanges and platforms: Need to prepare for a bifurcated model some tokens will remain in the SEC’s realm, others may fall to CFTC or state regimes.
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Investors: Will benefit from more transparent classification and thus better-informed risk assessments.
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Regulators: Will monitor evolution of networks; tokens may shift categories over time as decentralisation increases.
FAQs
Q1: What is the token taxonomy introduced by Paul Atkins?
The token taxonomy is a framework proposed by SEC Chair Paul Atkins to categorise digital assets so that regulators, issuers and investors can clearly determine which tokens qualify as securities under U.S. law and which may be treated as non-securities (commodities or other asset types).
Q2: How does the Howey test relate to the taxonomy?
The taxonomy is anchored in the Howey investment-contract test, which asks whether an asset represents a profit expectation from the efforts of others. Atkins emphasised that the test remains central and that economic reality matters more than labels (like “token” or “NFT”).
Q3: Does this mean all crypto tokens are no longer securities?
No. While Atkins said most tokens trading today are probably not securities, he stressed that some tokens still will be securities if they meet the investment-contract criteria. Moreover, tokens that begin as securities may evolve into non-securities as networks decentralise.
Q4: What are the main categories of tokens under the new taxonomy?
Atkins outlined roughly four types: (1) digital commodities/network tokens; (2) digital collectibles; (3) digital tools/membership/functional tokens; (4) tokenised securities. The first three may be treated as non-securities if criteria are met, while the fourth remains under securities regulation.
Q5: How will this affect regulation and oversight of tokens?
Tokens classified as securities will continue under SEC oversight, needing registration, disclosures, etc. Tokens outside that category may fall under other regimes (such as the CFTC or state regulators). The taxonomy helps differentiate treatment and possibly reduce regulatory burdens for non-securities.
Q6: When will the taxonomy come into effect?
Atkins indicated the SEC will consider establishing this taxonomy in the coming months. The framework is not yet finalised into rules, and its operationalisation will depend on rulemaking, staff recommendations and possibly legislation by Congress
