- Six major crypto organizations — representing Chainlink, Hedera, Aptos, Avalanche, Stellar, and Cardano — have formally urged the SEC to codify its March crypto asset classification framework into binding regulatory rules.
- The organizations argue that a crypto asset being the subject of an investment contract should not, by itself, transform that asset into a security under U.S. law.
- The group is also pushing the SEC to confirm that any new rule will not retroactively alter existing cryptocurrency classifications or shift jurisdictional boundaries between the SEC and the CFTC.
Six Crypto Foundations Demand SEC Codify Digital Commodity Definitions in Formal Rules
A coalition of six prominent blockchain organizations and foundations — affiliated with Chainlink, Hedera, Aptos, Avalanche, Stellar, and Cardano — has formally called on the U.S. Securities and Exchange Commission to elevate its March cryptocurrency classification framework from explanatory guidance into enforceable, binding regulatory provisions. The organizations contend that leaving asset classification criteria within interpretive or explanatory texts, rather than codifying them into official rules, perpetuates the regulatory ambiguity that has long hampered the digital asset industry in the United States.
The Core Dispute: Investment Contracts vs. Securities Status
At the heart of the coalition’s argument is a critical legal distinction: the organizations maintain that a crypto asset being the subject of an investment contract should not, in and of itself, transform that asset into a security. This position has significant practical implications for how tokens like Chainlink’s LINK, Hedera’s HBAR, Aptos’s APT, Avalanche’s AVAX, Stellar’s XLM, and Cardano’s ADA are regulated and traded in U.S. markets. By pressing the SEC to enshrine this principle in formal rulemaking, the foundations are seeking a clear legal boundary that protects digital commodities from being reclassified as securities solely on the basis of their participation in investment arrangements.
The distinction matters enormously from an operational standpoint. If a token were automatically classified as a security simply because it appeared in an investment contract, projects would face sweeping registration requirements, restrictions on trading venues, and compliance costs that many blockchain networks argue are disproportionate and ill-suited to decentralized assets. The six organizations are therefore asking the SEC to explicitly articulate that digital commodities retain their commodity status even when structured within investment contracts.
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Jurisdictional Clarity Between the SEC and CFTC Also Demanded
Beyond the investment contract question, the coalition is urging the SEC to make an unambiguous public commitment that any forthcoming formal rule will not retroactively alter existing cryptocurrency classifications, nor will it expand or reshape the jurisdictional boundary between the SEC and the Commodity Futures Trading Commission (CFTC). The division of oversight authority between these two agencies has been a persistent source of uncertainty for crypto market participants, and the organizations are seeking explicit regulatory language that preserves the current allocation of supervisory responsibilities rather than leaving it open to future reinterpretation.
SEC Response and Potential Industry Impact Remain Uncertain
It remains unclear whether the SEC will accept or act upon the coalition’s requests. Should the Commission incorporate the classification criteria into formal rulemaking, the move would represent a significant step toward regulatory clarity for digital asset projects operating in the United States. Conversely, if the SEC declines to codify these standards or introduces modifications in any final regulation, the operational environment for blockchain networks and token issuers could shift considerably, with downstream effects on exchange listings, institutional participation, and cross-border market access.
Why This Matters
The push from Chainlink, Hedera, Aptos, Avalanche, Stellar, and Cardano reflects a broader industry effort to secure durable, predictable legal footing in the U.S. crypto regulatory landscape. The SEC’s March classification framework was widely watched as a potential turning point, but guidance documents carry less legal force than formal rules and can be revised or withdrawn without the procedural protections afforded by the standard rulemaking process. By demanding that the framework be elevated into binding regulation, the coalition is effectively asking for the same procedural durability that governs other financial markets — a safeguard that would make it significantly harder for future administrations or Commission compositions to unilaterally alter the classification standards upon which these projects have built their compliance strategies. The outcome of this engagement with the SEC will likely shape U.S. crypto policy and jurisdictional clarity for years to come.
Frequently Asked Questions
- Why are Chainlink, Hedera, Aptos, Avalanche, Stellar, and Cardano asking the SEC to codify its classification framework?
- The six organizations want the SEC’s March crypto asset classification criteria enshrined in formal, binding rules rather than kept in explanatory texts, because official rules carry greater legal force, are harder to modify without public process, and would reduce the regulatory uncertainty currently facing digital asset projects in the United States.
- What is the key legal argument the coalition is making about investment contracts and securities?
- The organizations argue that a crypto asset being the subject of an investment contract should not automatically make that asset a security. They want the SEC to formally confirm that digital commodities retain their commodity classification even when they appear within investment contract structures.
- How could the SEC’s decision affect the broader crypto market?
- If the SEC incorporates the classification criteria into formal rules and confirms existing jurisdictional boundaries between itself and the CFTC, it would provide greater regulatory certainty for U.S.-based crypto projects and investors. If the SEC declines or introduces significant changes in any final regulation, operations, exchange listings, and the overall regulatory framework for digital assets in the U.S. could be materially affected.
This article is provided for informational purposes only and does not constitute investment advice.
