SEC to redefine crypto assets as ‘non-securities’ under new taxonomy

The Securities and Exchange Commission’s (SEC) Division of Corporation Finance is proposing that a clear taxonomy be developed for crypto assets in order to determine when they are no longer to be considered investment contracts. 

Division of Corporation Finance Director Moloney is attempting to create clear regulations for crypto assets in order to provide companies with information that keeps them from breaking the law. 

SEC to redefine crypto assets as ‘non-securities’ under new taxonomy

Director Moloney of the Securities and Exchange Commission’s Division of Corporation Finance, in a statement titled “Coming Attractions,” detailed his plans for crypto asset reform, reducing disclosure burdens, and modernizing reporting cycles. 

Project Crypto is an initiative that was first outlined by Chairman Atkins in late 2025 is an important part of the plan as it provides the market with a clear way to navigate what has previously been described as a “securities-law minefield.”

The SEC is developing a regulation that allows crypto assets to shed their status as an investment contract. Under this theory, a token might initially be sold as a security but could become a non-security once the issuer’s “essential managerial efforts” stop or the network becomes sufficiently decentralized.

The Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement on January 28, splitting digital assets into four categories: 

• Digital commodities
• Digital collectibles
• Digital tools 
• Tokenized securities 

Moloney emphasized that the division will also propose a “rational regulatory structure” for the offer and sale of tokens that remain classified as securities. 

Will semi-annual reporting hurt market transparency for everyday investors?

The proposal to end mandatory quarterly reporting is one of the most debated items on the division’s agenda. President Trump said to reconsider the frequency of financial filings in September 2025. 

Proponents, including Chairman Atkins, argue that the current 90-day reporting cycle forces companies to focus on short-term earnings targets at the expense of long-term growth.

Director Moloney compared the rigid system of quarterly reporting to being stuck in “The Terminal,” referencing the Spielberg film. This then prompted the division to work on formal rules to offer companies the option of reporting semi-annually instead. 

Various academic and shareholder advocacy groups have raised concerns about “information vacuums” arguing that less frequent reporting could increase market volatility and provide insiders with longer windows to trade on non-public information. 

The division is also working through a significant backlog in its Disclosure Review Program. Following a government shutdown in the fall of 2025, the SEC received nearly 1,000 registration statements. 

While processing times are “trending downward,” the division, under Rule 430A, has allowed some offerings to become effective automatically after 20 days. 

The Holding Foreign Insiders Accountable Act (HFIAA) also mandates that directors and officers of Foreign Private Issuers (FPIs) must report their stock trades to the SEC, just like U.S. insiders do. 

The rule is “self-executing,” meaning it becomes law on March 18, 2026, regardless of whether the SEC has finished writing its own internal guidelines. Moloney’s office has urged these foreign directors to get their identification numbers early to avoid a massive logjam in the EDGAR filing system.

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