Galaxy: “SEC’s new guidance ends Gensler-era uncertainty…clarifies standards for what counts as a security”

The U.S. Securities and Exchange Commission (SEC)’s recently released guidance on classifying crypto assets is being viewed across the industry as an official shift in the regulatory paradigm.

On the 20th (local time), Alex Thorn, head of research at Galaxy Digital, wrote on X that “this guidance goes beyond a simple interpretation; it codifies the regulatory stance shift the market has been feeling.” Earlier, the SEC classified crypto assets into five categories—▲digital commodities ▲digital collectibles ▲digital tools ▲stablecoins ▲digital securities—and specified that only “digital securities” fall under its regulatory remit.

Thorn said “the guidance is a signal that the litigation-driven approach under former SEC Chair Gary Gensler is coming to an end,” adding that “it is significant in that market participants can now operate based on clearer standards.”

He pointed to greater flexibility in the criteria for determining whether a token is a “security” as the key change. Previously, if an asset was deemed a security at the time of an initial sale, that characterization tended to persist into secondary-market trading. The new guidance, however, sets out a framework under which an asset can transition to a non-security if certain conditions are met. Thorn explained that “once an issuer completes the development it promised or a project ends, the investment-contract relationship can also be extinguished,” calling it “a departure from the prior ‘permanent security’ interpretation.”

The “efforts of others” prong—one of the main yardsticks of the Howey Test—was also narrowed. The SEC will consider only specific commitments made through official channels, excluding vague market expectations and community activity. Thorn underscored this as “a major improvement in regulatory clarity.”

Still, the guidance’s lack of legal binding force—given that it is an interpretive rule—is cited as a limitation. Thorn said that while it is “an important document reflecting the current SEC’s position,” it could still be revised depending on changes in the administration.