Bitcoin News Update: SEC Allows Tokens to Transition from Securities to Commodities as Decentralization Advances

The U.S. Securities and Exchange Commission (SEC) has introduced a comprehensive system for categorizing digital assets, aiming to clarify how cryptocurrencies are regulated and reduce ambiguity for those involved in the market. SEC Chair Paul Atkins revealed this framework, known as the token taxonomy, during a speech at the Federal Reserve Bank of Philadelphia on November 12, 2025. The taxonomy sorts crypto assets into four groups: securities, commodities, collectibles, and utility tokens. This move, which is part of Project Crypto,

— a legal benchmark from 1946 used to identify investment contracts — to assess whether a token should be considered a security.

According to this classification, digital commodities or network tokens that mainly serve a functional purpose within blockchain ecosystems

after the initial fundraising phase ends. Likewise, digital collectibles such as non-fungible tokens (NFTs) that represent unique assets, and digital tools that provide specific functionalities (like software access), if they do not meet the criteria of an investment contract. On the other hand, tokenized securities that directly represent financial stakes will continue to fall under SEC regulation. Atkins highlighted that this system allows tokens to shift from being classified as securities to commodities as decentralization increases, , "the token can still be traded, but those trades are no longer considered securities transactions."

This framework aims to strike a balance between fostering innovation and safeguarding investors. By applying the Howey test, the SEC seeks to offer a stable regulatory environment for both developers and investors, while also maintaining strong measures against fraudulent activities. that compliance expenses for offerings not classified as securities could drop by as much as 30% under this new approach. For those investing, the taxonomy regarding asset risks and regulatory obligations, making it easier to distinguish between securities that require prospectus filings and commodities that are traded on platforms regulated by the Commodity Futures Trading Commission (CFTC).

This proposal has ignited discussions about which agencies should have regulatory authority. While the SEC's plan centers on defining securities, the CFTC's responsibility for overseeing commodities — including possible spot markets for digital currencies — remains a contentious issue.

, such as the Digital Asset Market Clarity Act and the Responsible Financial Innovation Act, suggest transferring oversight of digital commodities to the CFTC or establishing a joint regulatory model for tokens that have characteristics of both securities and commodities. , chief investment officer at ProCap BTC, believe the CFTC’s commodity-centric perspective is better suited to the global and efficiency-driven nature of cryptocurrencies.

Atkins’ announcement comes after extensive public consultation, including more than 100 meetings and written submissions from various stakeholders. The SEC intends to finalize regulations that define "investment contracts" and introduce a process for certifying decentralization,

once control over the network is sufficiently dispersed. This could enable projects like to move from being considered securities to commodities, to satisfy regulatory requirements.

The effect of this framework on leading cryptocurrencies such as

(BTC) and Ethereum (ETH) is still uncertain. While BTC is expected to maintain its commodity classification under the CFTC, ETH’s status will depend on its progress toward decentralization. Market observers point out that increased regulatory certainty could attract more institutional investors and enhance liquidity, though among investors.