Is your token a security? In 1946 the Supreme Court needed ten pages.

Is your token a security? The Supreme Court settled the test in 1946 in ten pages, dissent included. The 2026 commentary on those ten pages runs to 196 pages of the Federal Register so far, and the comment period on the biggest piece closed eight days ago. I counted all of it and read the ten, the 20, the first eighth of the 146, and the cover sheet of the 30.

The case is SEC v. W.J. Howey Co., decided in 1946, and it is about oranges. The Howey Company sold strips of its Florida citrus groves to buyers, many of them guests at its own resort hotel, and a Howey affiliate farmed them under a service contract. The buyers were business and professional people who lacked "the knowledge, skill and equipment necessary for the care and cultivation of citrus trees." The company called it a land sale. The Court called it an investment contract, "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party." The trees were real and it did not matter. Swap the groves for a token and the hotel for a Discord server and you have most of crypto securities law.

The statute has picked up a few words since 1946. Token is not one of them. Section 2(a)(1) of the Securities Act defines "security" with a list: note, stock, bond, debenture, and, in the middle, "investment contract." The words token, crypto, blockchain, and digital asset appear nowhere in it. I checked twice.

For seven years the agency's view of how that list reaches a token lived in the Framework for "Investment Contract" Analysis of Digital Assets, dated April 3, 2019. It runs to 21 footnotes and says up front that it "is not a rule, regulation, or statement of the Commission." The title now carries one word in parentheses, Withdrawn, and a bracket naming the 20 pages that replaced it.

The great split decision of the enforcement era came on July 13, 2023, when Judge Analisa Torres in Manhattan ruled on the SEC's case against Ripple Labs in 34 pages. Ripple had sold $728 million of XRP to institutions under contracts, $757 million by algorithm on exchanges, and paid $609 million more to employees and developers. The institutional sales were investment contracts and the other two were not, because a buyer on an exchange "stood in the same shoes as a secondary market purchaser who did not know to whom or what it was paying its money." A security when sold to a hedge fund, something else when sold to a stranger by a robot, something else again when paid to an engineer. Footnote 16 declines to say what happens when any of them sells it to you.

Both sides appealed, then both gave up. On August 7, 2025, the SEC and Ripple jointly dismissed their appeals, leaving a $125,035,150 civil penalty and an injunction in place, binding no other court. A different judge found on December 28, 2023 that Terraform Labs and Do Kwon had sold crypto asset securities in unregistered transactions; a jury found fraud on April 5, 2024, and the bill came to more than $4.5 billion. The SEC's case against Coinbase ended on February 27, 2025, when the Commission dismissed it, "not on any assessment of the merits of the claims alleged in the action."

Then the agency changed its mind about how to have a mind. On January 21, 2025, it announced a Crypto Task Force and conceded that it had "relied primarily on enforcement actions to regulate crypto retroactively and reactively." Meme coin transactions, said a staff statement on February 27, "do not involve the offer and sale of securities," the coins being "akin to collectibles." Nine footnotes. "Covered Stablecoins," said another on April 4, do not either. Twenty-seven footnotes. Three kinds of protocol staking, said a third on May 29, do not either. Seventeen footnotes. Each carries the same disclaimer, that it "has no legal force or effect." Three documents saying what the law is not, each admitting it is not law.

Congress, meanwhile, changed the list. The Guiding and Establishing National Innovation for U.S. Stablecoins Act, signed July 18, 2025 as Public Law 119-27, runs 48 pages of the Statutes at Large. Section 17 adds the same sentence to five definitions of "security" and one of "commodity." The term "does not include a payment stablecoin issued by a permitted payment stablecoin issuer." It takes effect no later than January 18, 2027, and the regulators have been busy. In the Federal Register I count at least fifteen GENIUS Act rulemaking documents from five agencies since January. Stablecoins, at least, know what they are.

The rule in force this morning is seven months old. On March 17, 2026, Chairman Paul Atkins said the Commission was adopting a token taxonomy with "four asset categories that are not deemed securities: digital commodities, digital collectibles, digital tools, and payment stablecoins under the GENIUS Act." Six days later it appeared in the Federal Register, jointly from the SEC and the CFTC, 20 pages, effective that day. "Digital commodities, digital collectibles, and digital tools, each as further described below, are not themselves securities." Footnote 21 retires the 2019 Framework. Four more footnotes retire the 2025 staff statements. Footnote 47 says a token can sit inside an investment contract without becoming one, and Part IV says the contract ends when the issuer has kept its promises or publicly abandoned them. It is an interpretation. It does not bind a court, and the next Commission can replace it.

In the same speech the chairman said he expected the Commission to consider a proposed rule "in the coming weeks." It reached the Federal Register on August 21, which is 22 weeks, as Regulation Crypto Assets, 146 pages long. I stopped counting footnotes at 128, one-eighth of the way through. It would create a "startup exemption" for raising up to $5 million over four years and a "fundraising exemption" for up to $75 million in any 12-month period, plus a "conditional safe harbor from the term 'investment contract'" that would open once the issuer's "essential managerial efforts" are over, in the chairman's March phrase. Comments were due October 20. None of it is law yet.

The CFTC published on October 13 a 30-page advance notice of proposed rulemaking, which is a notice that a proposal may eventually be proposed. If you have ever watched a committee form a subcommittee to consider a working group, you understand the instrument.

The Digital Asset Market Clarity Act, H.R. 3633, passed the House on July 17, 2025, by 294 to 134. On September 15, 2026, Senate cloture on the motion to proceed failed, 49 to 50 with 60 needed, and Senator Thom Tillis entered a motion to reconsider, the parliamentary equivalent of leaving the engine running. The bill is alive in the sense that nothing has killed it.

The scoreboard

Four kinds of token are not securities and one kind is, which is a better answer than 21 footnotes ever gave. A digital commodity, a digital collectible, or a digital tool is not, though the deal that sold it can be an investment contract, and that turns on what was promised and when the promising stopped. A GENIUS payment stablecoin is not, by statute. A tokenized share of stock is, and always was. For once the regulator has written its case down, which is where the burden of proof has always belonged. The Senate is eleven votes short of starting the debate.

Columns are the views of their authors. They are not legal advice and not the position of the firm.