The following defined terms are drawn from the SEC and CFTC’s joint interpretive release, Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Securities Act Release No. 33-11412, Exchange Act Release No. 34-105020 (Mar. 17, 2026). For a full discussion of the Interpretation and its implications for issuers, developers, and market participants, see our companion client alert, The Crypto Asset Interpretation: The SEC and CFTC Issue Momentous Interpretive Release.
I. Core Crypto Asset Definitions
“Crypto Asset” — Any digital representation of value that is recorded on a cryptographically secured distributed ledger. This definition is identical to the definition of “Digital Asset” in section 2(6) of the GENIUS Act. (Interpretation at 4, n.1)
“Crypto Network” — A blockchain or similar distributed ledger technology network. (Interpretation at 4, n.1)
“Crypto Application” — A software application running on a crypto network. (Interpretation at 4, n.1)
“Crypto Systems” — Crypto networks and crypto applications, together. (Interpretation at 4, n.1)
“Onchain” — Transactions or data that are processed and recorded directly on a crypto network. (Interpretation at 4, n.1)
“Offchain” — Transactions or data that are processed and recorded outside of a crypto network. (Interpretation at 4, n.1)
“Functional (as applied to a crypto system)” — A crypto system is “functional” if the system’s native crypto asset can be used on the system in accordance with the programmatic utility of the system. (Interpretation at 14, n.49)
“Native (as applied to a crypto asset)” — A crypto asset generated for use on a particular crypto system. (Interpretation at 14, n.49)
“Decentralized (as applied to a crypto system)” — A crypto system that functions and operates autonomously with no person, entity, or group of persons or entities having operational, economic, or voting control of the crypto system. (Interpretation at 14, n.50)
“Network Effects” — The phenomenon where the value, use, and security of a crypto system increase as more users participate and interact with the crypto system. (Interpretation at 15, n.52)
“Central Party” — A person, entity, or group of persons or entities having operational, economic, or voting control of a crypto system. (Interpretation at 16, n.54)
“Non-Fungible Tokens / NFTs” — Non-interchangeable crypto assets with unique digital identifiers. Because NFTs constitute unique crypto assets, they cannot be replicated. In contrast, fungible crypto assets are interchangeable, meaning they are identical, of equal value, and substitutable for one another. (Interpretation at 13, n.46)
“Tokenization” — The process of creating a digital representation of a tangible or intangible asset using blockchain or similar distributed ledger technology. (Interpretation at 23, n.82)
“Token Standard” — The specifications governing how a crypto asset functions in a crypto system. Such specifications address a wide range of functions including how the crypto asset is transferred, how transactions are approved, and how data is accessed. (Interpretation at 57, n.137)
“Whitepaper” — A document that describes the technical aspects of a crypto asset project (i.e., a crypto asset and the associated crypto system) along with other relevant details. (Interpretation at 26, n.92)
“Whitelisting” — The practice of explicitly allowing only pre-approved applications, users, email addresses, or IP addresses to access a crypto system or service. (Interpretation at 18, n.63)
II. Crypto Asset Classification Categories
“Non-Security Crypto Asset” — A crypto asset that itself is not a security. (Interpretation at 8)
“Digital Commodity” — A crypto asset that is intrinsically linked to and derives its value from the programmatic operation of a crypto system that is “functional,” as well as supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others. A digital commodity does not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor, but may have certain other rights. Examples include APT, AVAX, BTC, BCH, ADA, LINK, DOGE, ETH, HBAR, LTC, DOT, SHIB, SOL, XLM, XTZ, and XRP. (Interpretation at 14)
“Digital Collectible” — A crypto asset that is designed to be collected and/or used and may represent or convey rights to artwork, music, videos, trading cards, in-game items, or digital representations or references to internet memes, characters, current events, or trends, among other things. A digital collectible does not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor. Examples include CryptoPunks, Chromie Squiggles, Fan Tokens, WIF, and VCOIN. (Interpretation at 16–17)
“Meme Coin” — A type of crypto asset inspired by internet memes, characters, current events, or trends for which the creator seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading. Meme coins typically are acquired for artistic, entertainment, social, and cultural purposes, and their value is driven by supply and demand, rather than any essential managerial efforts of others. (Interpretation at 18)
“Governance Token” — A digital commodity that allows holders to vote on certain technical or governance matters with respect to the associated functional crypto system, such as software upgrades and treasury expenditures. (Interpretation at 15)
“Digital Tool” — A crypto asset that performs a practical function, such as a membership, ticket, credential, title instrument, or identity badge. Digital tools are commonly issued for use in connection with crypto systems and are designed to perform practical functions within such systems. A digital tool does not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise or other entity, promisor, or obligor. Examples include Ethereum Name Service domain names and CoinDesk’s “Microcosms” NFT Consensus Ticket. (Interpretation at 20)
“Soul-Bound (as applied to digital tools)” — Digital tools designed for permanent association with a specific digital identity and intended to represent aspects of an individual’s or entity’s identity that typically are not transferable, such as academic degrees, professional certifications, memberships, or verifiable work history. (Interpretation at 20, n.68)
“Stablecoin” — A crypto asset that is designed to maintain a stable value relative to a reference asset like the U.S. dollar. (Interpretation at 21)
“Payment Stablecoin” — As defined in section 2(22) of the GENIUS Act: a digital asset that is, or is designed to be, used as a means of payment or settlement, and the issuer of which generally is obligated to convert, redeem, or repurchase the digital asset for a fixed amount of monetary value, and represents that it will maintain, or create the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value. (Interpretation at 21–22)
“Permitted Payment Stablecoin Issuer” — As defined in section 2(23) of the GENIUS Act: a person formed in the United States that is (1) a subsidiary of an insured depository institution that has been approved to issue payment stablecoins under section 5 of the GENIUS Act; (2) a Federal qualified payment stablecoin issuer; or (3) a State qualified payment stablecoin issuer. (Interpretation at 22)
“Covered Stablecoins” — Stablecoins as described in the Staff Stablecoin Statement (Apr. 4, 2025), the offer and sale of which do not involve the offer and sale of securities within the meaning of section 2(a)(1) of the Securities Act or section 3(a)(10) of the Exchange Act. (Interpretation at 22–23 & n.79)
“Digital Security” — A financial instrument enumerated in the definition of “security” that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks. Commonly known as a “tokenized” security. (Interpretation at 23)
III. Investment Contract Concepts
“Issuer” — For purposes of the Interpretation, references to an “issuer” include affiliates and agents of the issuer or a promoter. (Interpretation at 24, n.83)
“Purchaser” — For purposes of the Interpretation, references to a “purchaser” include prospective purchasers. (Interpretation at 25, n.87)
“Essential Managerial Efforts” — Managerial efforts that meet the Howey test’s “efforts of others” requirement — i.e., “the efforts made by those other than the investor [that] are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.” Administrative and ministerial activities are not managerial efforts that satisfy Howey’s “efforts of others” requirement. (Interpretation at 12, n.42)
IV. Protocol Mining
“Consensus Mechanism” — A method for enabling the distributed network of unrelated computers (known as “nodes”) that maintain the peer-to-peer network to agree on the “state” (or authoritative record of network address ownership balances, transactions, smart contract code, and other data) of the network. (Interpretation at 34)
“Nodes” — The distributed network of unrelated computers that maintain a peer-to-peer crypto network. (Interpretation at 34)
“Proof-of-Work / PoW” — A consensus mechanism that incentivizes transaction validation by rewarding participants, called “miners,” who operate nodes adding computational resources to the PoW Network. (Interpretation at 35)
“PoW Networks” — Public, permissionless crypto networks that use proof-of-work as a consensus mechanism. (Interpretation at 35)
“Miners” — Participants who operate nodes adding computational resources to a PoW Network to validate transactions. (Interpretation at 35)
“Protocol Mining” — Mining digital commodities on PoW Networks. (Interpretation at 35)
“Protocol Mining Activities / Protocol Mining Activity” — The Protocol Mining activities addressed by the Interpretation when such activities conform to the descriptions therein: (1) mining digital commodities on a PoW Network; and (2) the roles of mining pools and pool operators involved in the Protocol Mining process, including their roles in connection with the earning and distribution of rewards. (Interpretation at 37)
“Double Spending” — The scenario in which the same crypto assets are sent to two recipients, which can occur when ledger entries are altered. (Interpretation at 36, n.102)
V. Protocol Staking
“Proof-of-Stake / PoS” — A consensus mechanism used to prove that operators of nodes participating in the PoS Network have contributed value to the PoS Network that, in some cases, can be forfeited if they act dishonestly. (Interpretation at 40)
“PoS Networks” — Public, permissionless crypto networks that use proof-of-stake as a consensus mechanism. (Interpretation at 35)
“Protocol Staking” — Staking digital commodities on PoS Networks. (Interpretation at 35)
“Node Operators” — Operators of nodes participating in a PoS Network. A Node Operator must stake the PoS Network’s digital commodity to be selected programmatically by the PoS Network’s software protocol to validate new blocks of data to, and update the state of, the PoS Network. (Interpretation at 40)
“Validator” — A Node Operator that has been selected programmatically by a PoS Network’s software protocol to validate new blocks of data to, and update the state of, the PoS Network. (Interpretation at 40)
“Owners” — Digital commodity owners, in the context of Protocol Staking. (Interpretation at 42)
“Custodian” — A third party that takes custody of an Owner’s digital commodities and facilitates staking them on behalf of the Owner. (Interpretation at 42)
“Depositors” — Owners who deposit their digital commodities with a Custodian or Liquid Staking Provider. (Interpretation at 42)
“Bonding Period” — A length of time set by the terms of the applicable PoS Network’s software protocol after which the staked digital commodities become eligible to earn rewards. (Interpretation at 41)
“Unbonding Period” — A length of time set by the terms of the applicable PoS Network’s software protocol after which digital commodities that are unstaked are unlocked and can be transferred. (Interpretation at 41, n.110)
“Slashing / Slashed” — The forfeiture of a Node Operator’s or Validator’s staked digital commodities as a penalty for engaging in activities detrimental to the PoS Network’s security and integrity (e.g., validating invalid blocks or double signing) or failing to adhere to the PoS Network’s technical requirements. (Interpretation at 41, n.111)
“Liquid Staking” — A form of Protocol Staking whereby Depositors receive newly generated crypto assets (“Staking Receipt Tokens”) that evidence Depositors’ ownership of the deposited digital commodities and any rewards that accrue to the deposited digital commodities. (Interpretation at 43)
“Staking Receipt Tokens” — Newly generated crypto assets issued to Depositors on a one-for-one basis to the amount of the deposited digital commodities that evidence Depositors’ ownership of the deposited digital commodities and any rewards that accrue to the deposited digital commodities. Staking Receipt Tokens enable their holders to maintain liquidity without having to withdraw the deposited digital commodities from staking. (Interpretation at 43)
“Burned (as applied to Staking Receipt Tokens and Redeemable Wrapped Tokens)” — A process through which tokens are permanently removed from circulation, occurring upon redemption of Staking Receipt Tokens or Redeemable Wrapped Tokens for the deposited crypto assets. (Interpretation at 44, n.116)
“Liquid Staking Providers” — Protocol-based or third-party service providers through which persons participate in Liquid Staking. The Liquid Staking Provider facilitates the staking of the deposited digital commodities on behalf of the Depositor. (Interpretation at 44)
“Delegate” — A Node Operator to whom an Owner delegates its validation rights, thereby allowing the Node Operator to use the staked digital commodities to verify transactions on the PoS Network on behalf of the Owner. (Interpretation at 42, n.112)
“Nominators” — Persons to whom an Owner may grant its validation rights to act on the Owner’s behalf in selecting Validators. (Interpretation at 42, n.112)
“Protocol Staking Activities / Protocol Staking Activity” — The Protocol Staking activities addressed by the Interpretation when such activities conform to the descriptions therein: (1) staking digital commodities on a PoS Network; (2) the activities undertaken by Service Providers involved in the Protocol Staking process, including their roles in connection with the earning and distribution of rewards; (3) the activities undertaken by Liquid Staking Providers in connection with generating, issuing, and redeeming Staking Receipt Tokens; and (4) providing Ancillary Services. (Interpretation at 46)
“Service Providers” — Collectively, third-party Node Operators, Validators, Custodians, Delegates, Nominators, and Liquid Staking Providers. (Interpretation at 46)
“Ancillary Services” — Certain administrative or ministerial services that Service Providers may provide to Owners and Depositors in connection with Protocol Staking, including: (1) Slashing Coverage; (2) Early Unbonding; (3) Alternate Rewards Payment Schedules and Amounts; and (4) Aggregation of Digital Commodities. (Interpretation at 50–52)
“Restaking” — A process that allows digital commodities staked on their associated crypto network to be used on additional crypto systems. Note: the Interpretation expressly states it does not address restaking. (Interpretation at 40, n.107)
VI. Wrapping
“Wrapped Token Provider” — A Custodian or cross-chain bridge with which a person deposits a crypto asset and in return receives an equivalent amount of Redeemable Wrapped Tokens on a one-for-one basis. (Interpretation at 54)
“Cross-Chain Bridge” — Self-executing code that uses smart contracts to programmatically generate and redeem Redeemable Wrapped Tokens without the use of a Custodian, facilitating interoperability between different crypto networks and token standards. (Interpretation at 54, n.132)
“Redeemable Wrapped Token” — A crypto asset issued on a crypto network that represents either a crypto asset native to a different crypto network or a crypto asset based on a different token standard and that both (1) is backed one-for-one by the deposited crypto asset, and (2) can be redeemed on a fixed one-for-one basis for the deposited crypto asset, in which case the Redeemable Wrapped Token is burned and thereby permanently removed from circulation. (Interpretation at 54, n.133)
VII. Airdrops
“Airdrop” — A means for crypto asset issuers to disseminate their crypto assets in exchange for no or nominal consideration. The issuer effectuates an airdrop by transferring its crypto asset to specific cryptographic wallets or other addresses. (Interpretation at 58)