Milestone guidance implemented: SEC and CFTC join forces, marking the end of the "securities of everything" era for the crypto world.

Author: Jae, PANews

On March 17, while the cherry blossoms in Washington, D.C., were not yet in full bloom, the crypto industry, which was experiencing a "cold snap," found a glimmer of warmth during a speech.

On the stage of the DC Blockchain Summit, Paul Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), made a seemingly joking but weighty remark: We are no longer the "Securities and Everything Commission".

This declaration marks the official end of an era in which "law enforcement replaced regulation," leaving countless developers sleepless with uncertainty.

A 68-page declaration overturns the "Securities of Everything" theory.

Over the past few years, the biggest nightmare for the crypto industry has been the endless generalization of the Howey Test.

An asset can be classified as a security by the SEC if it involves "funds invested in a common cause, with a reasonable expectation that profits will come from the efforts of others." In short, the entire crypto industry lives in the shadow of potential enforcement action.

Yesterday, the SEC and the U.S. Commodity Futures Trading Commission (CFTC) jointly released a 68-page document titled "Applicability Guidance on Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets under Federal Securities Acts," which clearly defines that most mainstream crypto assets are not securities.

Atkins emphasized that regulators' responsibility is to "draw clear lines with clear language." Regulation needs to provide markets with a "compliance uphill" rather than an "enforcement trap," and this guidance is the SEC's systematic reckoning with the regulatory chaos of the past decade.

This guideline establishes a sophisticated “token taxonomy” that liberates crypto assets from a single security label.

The guidelines specifically elucidate the concept of "functional" cryptographic systems. When the value of an asset derives primarily from the programmatic operation of the system and market supply and demand, rather than the management efforts of a single issuer, this asset acquires the attributes of a "commodity." This interpretation could provide a significant legal safeguard for public blockchain protocols.

More importantly, the guidelines also provide a positive response to mining, protocol staking, and airdrops, which have been of long-standing concern to the industry: in the absence of a clear issuer as a counterparty or manager, these algorithm- and code-based behaviors are generally not considered as securities offerings.

This represents a logical shift from "the asset itself is a security" to "the sales method determines the security's nature." It essentially adopts the same logic used by the judge in the Ripple case: XRP itself is not a security; only specific institutional sales contracts can constitute a security issuance.

If the joint guidelines represent macro-level regulatory correction, then the CFTC's latest "No Action Letter" (NFA) to the wallet application Phantom represents micro-level implementation.

Phantom plans to provide access to regulated derivatives and event contracts, which in the past would have been easily identified as an unregistered "introducing broker" (IB).

However, the CFTC’s Market Participants Division determined that Phantom’s role was limited to providing a “passive software interface” that allowed users to interact directly with registered Designated Contract Markets (DCMs) or Futures Brokers (FCMs) without accessing user assets or matching trades.

For the first time, regulators have explicitly acknowledged that purely software interfaces are not legally liable to their brokers. This distinction between "code" and "intermediary" will significantly unlock the potential of wallets as Web3 business portals.

Phantom's regulatory approval could provide a replicable, scaled version for non-custodial wallets, Layer 2 interfaces, and even DeFi protocol front-ends.

Regulatory restructuring will create a triple ripple effect on the crypto ecosystem.

When "most crypto assets are not securities" becomes the official benchmark, the market pricing logic will undergo a fundamental change.

Previously, due to the expectation of securitization, the liquidity of many tokens was restricted to non-US platforms, and US users were excluded, resulting in a severe "compliance discount".

The release of the new guidelines is expected to trigger a large-scale asset revaluation, especially for projects with functional utility (digital tools) and effective market regulation mechanisms (digital commodities).

With the implementation of unified guidelines from the SEC and CFTC, the integration and access of crypto assets to traditional finance will become smoother. National pension funds, traditional hedge funds, mutual funds, and even corporate treasuries can allocate assets according to a clear classification system, significantly reducing the risk of future regulatory tracing. Furthermore, ETF applications for various tokens will be processed more smoothly.

It's worth noting that CFTC Chairman Michael Selig has expressed positive support for "tokenized collateral." The CFTC is developing new rules to use eligible tokenized assets as collateral, aiming to promote 24/7 real-time risk management in financial markets and further optimize capital efficiency.

The NFA grant to Phantom signifies that regulators are beginning to embrace the disintermediation nature of blockchain. This distinction between "interface" and "intermediary" may encourage more developers to adopt decentralized architectures, stimulating more crypto innovation.

Although they do not possess private keys or facilitate transactions, this "regulatory-driven technological evolution" may lead more protocols to choose a more decentralized operating model. On-chain activities are unshackled, and decentralized platforms can openly welcome customers.

After the spring thunder in Washington, the crypto industry has finally received a long-awaited rain.

With the joint efforts of the two chairpersons, the once-fragmented regulatory system is healing, and the blurred legal boundaries are gradually becoming clearer.

Of course, the game continues. Full implementation of the guidelines will take time, but the general direction is clear. As PANews has emphasized: compliance is not the enemy of innovation, but rather its ticket to the mainstream market.

With most crypto assets being classified as non-securities and non-custodial interfaces gaining regulatory approval, the crypto industry is slowly shedding its image as an "illegal experiment" and donning the attire of a "cornerstone of digital finance."

The implementation of this series of regulatory actions signifies the end of an era where profits were made through ambiguity, and the beginning of a new era of cryptocurrencies where pricing is based on certainty, transparency, and technological prowess.