---
type: claim
domain: internet-finance
description: "The SEC formally decoupled the asset from the investment contract — a non-security crypto asset may temporarily become subject to an investment contract and later cease, overturning the Gensler-era conflation of token identity with securities status"
confidence: proven
source: "SEC Interpretive Release S7-2026-09 (March 17, 2026); Chairman Atkins remarks"
created: 2026-03-18
---

# The SEC's distinction between the crypto asset and the investment contract means tokens are not inherently securities and only the surrounding transaction structure can create securities obligations

Chairman Atkins stated explicitly: "Most crypto assets are not themselves securities" and "We're not the Securities and Everything Commission." The SEC interpretation establishes that:

1. A crypto asset is NOT itself a security — the asset and the investment contract are analytically distinct
2. A non-security crypto asset may temporarily become SUBJECT TO an investment contract when accompanied by representations of essential managerial efforts
3. The asset may later CEASE being subject to that contract (via fulfillment or abandonment)
4. Secondary market transactions on exchanges do NOT transform non-security assets into securities

This overturns the Gensler-era approach that conflated the token with the investment contract — treating specific tokens as inherently securities regardless of transaction context. Under the new framework, the analysis considers: the SOURCE of representations, the MEDIUM by which they're communicated, and their LEVEL OF DETAIL.

The practical implication: a token sold in an ICO with promises of development (investment contract applies) can later trade freely on secondary markets without securities registration once the issuer fulfills or abandons those promises. The token itself never changes — only its regulatory context does.

For futarchy governance tokens, this creates important clarity. META or OMFG tokens are not inherently securities. The question is whether their initial sale involved representations of essential managerial efforts — and if so, whether those efforts have since been fulfilled or abandoned. The ongoing market-driven governance mechanism is not itself a securities-creating activity.

---

Relevant Notes:
- [[the SECs investment contract termination doctrine creates a formal regulatory off-ramp where crypto assets can transition from securities to commodities by demonstrating fulfilled promises or sufficient decentralization]] — the termination doctrine operationalizes this asset/contract distinction
- [[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]] — the asset/contract distinction supports the structural argument

Topics:
- [[internet finance and decision markets]]
