Six crypto organizations have urged the U.S. Securities and Exchange Commission to place its definition of “digital commodities” directly into the binding text of its proposed Crypto Asset Regulation Rules, seeking harder-to-reverse legal treatment for tokens including Bitcoin, Ethereum, LINK, ADA, HBAR, APT, AVAX and XLM.
In a joint comment letter filed Oct. 20, Chainlink Labs, Cardano Foundation, Hedera, Aptos Labs, Ava Labs and the Stellar Development Foundation argued that the SEC’s current approach leaves a major classification issue in explanatory material rather than in the rule provisions that would govern market participants.
The groups want the final rule to state that digital commodities are not securities and to define the category in the operative regulatory language. Their request focuses on the durability of the SEC’s position, rather than simply obtaining another staff statement on how the agency views individual tokens.
Industry groups target the rule’s legal structure
The SEC’s March 17 interpretive release described digital commodities as one of five crypto-asset categories. It identified BTC, ETH, LINK, ADA, HBAR, APT, AVAX and XLM as examples, saying their value is driven primarily by network use and market supply and demand rather than expectations that an issuer’s essential managerial work will generate profits.
That interpretation was carried into the SEC’s Aug. 18 proposal, which would establish an issuance framework for certain investment contracts involving crypto assets and create potential registration exemptions. Yet the digital-commodity definition and the statement that such assets are not securities appear in the proposal’s preamble and explanatory discussion, according to the six organizations, rather than in the rule’s enforceable provisions.
The distinction carries procedural consequences. The groups pointed to the Administrative Procedure Act, under which substantive rules generally require public notice and comment before they can be adopted or materially changed. Interpretive guidance does not face the same process requirements.
By seeking a place for the language in the rule itself, the organizations are asking the SEC to make future reversals more difficult than a change in staff guidance or an agency interpretation. The request reflects concern that a token’s legal status could otherwise depend too heavily on the priorities of future SEC leadership.
SEC Chair Paul Atkins made a similar distinction in connection with the March release, stating that most crypto assets themselves are not securities and that an investment-contract relationship can end. Atkins described the interpretation as transitional while Congress continued work on digital-asset market-structure legislation.
Letter separates tokens from fundraising arrangements
The groups also asked the SEC to draw a sharper line between a token and an investment contract that may have involved the token.
Their letter said an early token sale can potentially be an investment contract where it raises development capital and includes promises tied to the issuing team’s managerial efforts. A subsequent sale between third parties should be judged independently, they argued, rather than automatically inheriting the legal character of the original fundraising transaction.
That position addresses one of the longest-running disputes in U.S. crypto securities law: whether a token can remain a security indefinitely because of the manner in which it was initially distributed. The organizations contend that securities analysis should focus on the circumstances of each transaction, including whether purchasers are relying on continuing managerial commitments from an issuer or promoter.
They proposed a presumption for secondary-market transactions. When an issuer’s commitments involving key managerial efforts are no longer effective, third-party trading should be presumed not to involve an investment contract, the letter said.
The proposed presumption would not automatically exempt every token transaction from securities law. Instead, it would make the issuer’s live obligations and the expectations created for buyers central to the analysis. That approach could give token projects a clearer route to demonstrating that an asset has moved beyond its original capital-raising stage.
The six organizations also asked the SEC not to treat a project’s decision to forgo the proposal’s compliance pathways as an independent reason to classify token trading as an investment contract. In practical terms, they are seeking to prevent the agency from treating non-participation in a voluntary or conditional regulatory route as evidence of a securities violation.
Staking remains a separate question
The letter argued that a digital commodity’s status should not settle the legal treatment of every service connected to it, particularly staking.
The organizations said that a staking program operated by a service provider should be assessed based on the provider’s role and any commitments related to yield. A token could be a digital commodity while a particular staking arrangement could raise separate securities-law questions, depending on whether the service provider pools assets, exercises discretion, markets expected returns, or makes other relevant promises.
That framing seeks to avoid treating native protocol staking and third-party yield products as legally interchangeable. It would preserve room for scrutiny of service-provider conduct without automatically applying securities rules to the underlying asset.
The letter cited SEC staff FAQs issued in September that addressed subjects including staking receipt tokens. The organizations said those staff materials do not carry legal effect, leaving uncertainty over which services and transactions fall within securities rules and when any regulatory coverage ends.
Congressional delay raises pressure on the SEC
The organizations’ push for binding language comes as congressional legislation remains stalled. On Sept. 15, the Senate voted 49–50 on a procedural motion to advance the Digital Asset Market Clarity Act, short of the 60 votes required.
Law firm DLA Piper assessed that the bill’s prospects of enactment this year had fallen sharply because of limited time remaining in the current Congress and competing legislative priorities. If the measure does not pass before the current Congress ends, it would typically need to be introduced again in the next Congress in 2027, the firm said.
That legislative uncertainty places more immediate weight on the SEC’s final rulemaking. Agency rules cannot replace a market-structure statute, but the treatment of digital commodities in the final text could shape how token issuers, developers, staking providers and secondary-market platforms evaluate compliance risk.
Other commenters have offered sharply different prescriptions. Bitwise and the Hyperliquid Policy Center have called for clearer token classifications, more expansive compliance safe harbors, and specific treatment for airdrops and token buybacks. Former SEC enforcement official John Reed Stark and Duke University academic Lee Reiners have urged the SEC to withdraw the proposal, arguing that it exceeds the agency’s authority and weakens protections for investors.
The SEC has not said whether it will adopt the six organizations’ requested changes. Its decision on whether digital-commodity language remains in the preamble or moves into the rule itself will determine whether the agency’s March interpretation functions mainly as guidance or as a more durable part of the U.S. regulatory framework for crypto assets.
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