Crypto Regulatory Classification Estimator
Token Classification Guide
The SEC and CFTC have conflicting views on crypto regulation. This tool estimates whether a token is more likely to be classified as a security (regulated by SEC) or commodity (regulated by CFTC) based on key characteristics.
Howey Test Criteria: A token is a security if investors buy expecting profits from others' efforts. Key factors:
- Token sales are primarily for investment
- Project team actively promotes profits
- Token holders have no utility rights
- Profit expectations are based on the team's work
Enter token details to see classification estimate
The U.S. crypto market is caught in a tug-of-war between two federal agencies that can’t agree on who’s in charge. The SEC says most crypto tokens are securities. The CFTC says they’re commodities. And right now, no one knows which rules to follow.
How It Started: Two Agencies, Two Laws
It all goes back to 2015. The CFTC stepped in first, ruling that Bitcoin was a commodity under the Commodity Exchange Act. That meant they could step in if someone manipulated Bitcoin prices or traded futures without proper oversight. They didn’t see Bitcoin as an investment contract - just a digital good, like gold or oil. The SEC didn’t agree. They saw something else: people buying tokens not to use them, but because they expected the price to go up - thanks to the team behind the project. That’s the heart of the Howey Test, a 1946 Supreme Court rule used to decide if something is a security. If you invest money in a project expecting profits from someone else’s work, the SEC says it’s a security. And that means it needs to be registered, disclosed, and regulated like a stock. So right away, there was a split. Bitcoin? Commodity. A new token sold in an ICO? Security. But what about Ethereum? Or Solana? Or a token that started as a utility but became a speculative asset? The lines blurred fast.The Gray Zone: Where Most Tokens Live
Here’s the problem: most crypto projects don’t fit neatly into one box. Take Ethereum. The CFTC called it a commodity in 2019. The SEC never officially said it was a security - but they’ve never said it isn’t either. That’s the gray zone. And it’s where nearly every major crypto project sits. That uncertainty is why exchanges like Coinbase got sued in 2023. The SEC claimed Coinbase was operating as an unregistered securities exchange because it listed tokens they believed were securities. Coinbase argued the SEC hadn’t given clear rules - and the court agreed, at least partially. In February 2025, the SEC dropped the case entirely. That wasn’t a win for Coinbase. It was a sign the SEC was backing off its all-or-nothing enforcement strategy. Meanwhile, the CFTC kept moving forward. They approved Bitcoin futures in 2017. Ether futures in 2023. And in April 2025, they approved spot Ethereum ETFs - a move the SEC has delayed for months. The CFTC isn’t waiting for Congress. They’re acting on what they already have authority over: commodities.
Who Has More Power? Enforcement Numbers Don’t Lie
From 2017 to 2022, the SEC launched 32 enforcement actions against crypto firms. The CFTC launched 15. In 2023 alone, the SEC filed 23 cases - most of them against exchanges and platforms for listing unregistered securities. The CFTC’s top violation? Failure to register as a futures broker. That tells you something. The SEC is going after platforms that let people trade tokens. The CFTC is going after platforms that let people trade futures on tokens. The SEC wants to stop speculation. The CFTC wants to regulate it - and tax it. The difference isn’t just legal. It’s cultural. The CFTC was built to handle futures markets - oil, wheat, gold. They’re used to volatility. They don’t panic when prices swing. The SEC was built to protect investors from fraud. They see crypto as a wild frontier full of scams. That’s why they move faster to shut things down.What’s Changing in 2025? The Laws Might Finally Catch Up
For years, Congress sat on the sidelines. But in April 2024, the House passed the CLARITY Act. It’s simple: if a digital asset is decentralized, runs on a mature blockchain, and doesn’t give you ownership rights in a company - it’s a commodity. That puts Bitcoin, Ether, and others under the CFTC’s control. If a token is sold like a share of a company - promising profits from a team’s efforts - it’s a security. That stays with the SEC. This isn’t just theory. It’s a real framework. And it’s gaining support. The Senate hasn’t passed anything yet, but behind closed doors, lawmakers are talking. The CFTC’s recent approval of spot Ethereum ETFs? That’s a power play. They’re saying: we’re ready to regulate this. Are you? The SEC’s delay on Bitcoin ETFs isn’t about risk. It’s about control. They don’t want to lose jurisdiction. But the market is moving. And the CFTC is moving faster.
What This Means for You
If you’re a trader: the SEC’s crackdowns make it harder to buy new tokens on U.S. exchanges. But if you’re trading Bitcoin or Ether, the CFTC’s approval of ETFs means you’ll soon be able to buy them through your brokerage account - just like Apple stock. If you’re a developer: launching a new token? Don’t assume it’s safe just because it’s called a “utility token.” The SEC doesn’t care what you call it. They care what it does. If people are buying it hoping to profit from your team’s work, you’re in their crosshairs. If you’re a business: compliance costs are insane. Companies spend an average of $2.7 million a year just trying to follow both agencies’ rules. Many are moving operations overseas - to Europe, where MiCA created one clear set of rules in June 2024. The U.S. is losing ground. In 2020, American firms controlled 32% of the global crypto market. By 2024, that dropped to 14%.What Comes Next?
The most likely outcome? A compromise by the end of 2025. The CFTC gets Bitcoin and Ether. The SEC keeps control over new tokens sold to investors. Exchanges will have to label tokens clearly: “This is a security,” or “This is a commodity.” But here’s the real question: will Congress act before the market leaves for good? Right now, the U.S. has the most advanced blockchain developers, the most venture capital, and the most users. But without clear rules, all of that is at risk. The battle isn’t just about law. It’s about who gets to shape the future of money. And right now, the CFTC is winning the race to regulate. The SEC is still trying to catch up.Is Bitcoin a security or a commodity?
Bitcoin is treated as a commodity by the CFTC, and courts have consistently backed that view. The SEC has never claimed Bitcoin is a security. It’s the only crypto asset both agencies largely agree on.
Why does the SEC care about crypto if it’s not a stock?
The SEC doesn’t care about the tech. They care about how people buy and sell tokens. If someone buys a token expecting to profit from a company’s efforts - even if it’s called a “coin” - the SEC says it’s a security under the Howey Test. It’s about the economics, not the code.
Can I trade crypto on U.S. exchanges without legal risk?
Yes - but only if you stick to assets clearly classified as commodities: Bitcoin and Ether. Most other tokens are in legal limbo. Exchanges like Coinbase and Kraken have pulled dozens of tokens from U.S. platforms because they can’t be sure if the SEC will sue them later.
What’s the difference between a futures contract and a security?
A futures contract is a bet on the future price of something - like Bitcoin. You don’t own the asset, you just bet on its price. The CFTC regulates those. A security gives you a share in a company or project - rights to profits, voting, or ownership. The SEC regulates those. You can have both: a Bitcoin futures contract (CFTC) and a token that gives you a cut of platform fees (SEC).
Why are U.S. crypto companies moving overseas?
Because Europe’s MiCA law gives them one clear rulebook. In the U.S., companies must guess whether they’re regulated by the SEC or CFTC - or both. That’s expensive and risky. Many are relocating to Switzerland, Singapore, or the UAE, where rules are clear and enforcement is predictable.
Will we ever get a single crypto regulator in the U.S.?
Unlikely. Congress likes having two agencies check each other. The goal isn’t one regulator - it’s clear lines. The CLARITY Act is the closest we’ve come. If it passes, the SEC handles new tokens, the CFTC handles established ones. That’s not perfect - but it’s better than the chaos we have now.
SHIVA SHANKAR PAMUNDALAR
November 28, 2025 AT 01:54The whole SEC vs CFTC mess is just bureaucratic theater. One agency sees money, the other sees tech. Neither understands how decentralized networks actually work. We’re regulating smoke and mirrors while the real innovation happens offshore.
Evelyn Gu
November 29, 2025 AT 20:49I just want to know if I can buy ETH on Fidelity without getting sued… I mean, I’m not trying to be a criminal, I’m just trying to invest like my dad did with stocks in the ‘90s. Why does it have to be this complicated??
stephen bullard
December 1, 2025 AT 16:25There’s something poetic about this fight. The SEC is the strict parent who wants to protect you from yourself. The CFTC is the chill uncle who says, ‘Hey, if you wanna bet on the price of gold or Bitcoin, fine-but don’t blame me when you lose.’ Maybe we need both. But we definitely need clarity.
It’s not about who’s right-it’s about who’s useful. The CFTC’s been building the infrastructure for decades. The SEC is still trying to figure out if a token is a ‘security’ or just a really weird digital sticker.
SHASHI SHEKHAR
December 3, 2025 AT 02:19Let me break this down real simple 🧵
1. Bitcoin = commodity → CFTC
2. New token sold with promise of profit = security → SEC
3. Ethereum? Still in limbo because the devs said ‘it’s decentralized now’ but the SEC says ‘but you raised $4B in an ICO’
Here’s the kicker: most projects are neither fully decentralized nor fully centralized. They’re in that weird in-between zone where lawyers make millions and devs cry.
And yes, the CLARITY Act is the best shot we’ve had. If it passes, exchanges can finally label things clearly. No more guessing games. No more ‘oops we got sued’ moments.
Also, why is no one talking about how the CFTC approved spot ETH ETFs before the SEC even blinked? That’s not just regulatory-it’s psychological. The CFTC is saying, ‘We’re ready. Are you?’ And the SEC is stuck in ‘what if?’ mode.
Vaibhav Jaiswal
December 3, 2025 AT 07:54Bro… the fact that we’re still arguing about whether crypto is a security or commodity in 2025 is insane. It’s like arguing whether the internet is a phone line or a newspaper. It’s both. It’s neither. It’s something new.
Stop trying to fit square pegs into round holes. The market’s already moved on. People are buying ETH ETFs on Robinhood. Miners are setting up shop in Texas. Developers are moving to Dubai. The regulators are still writing memos.
Let’s just pick a side already.
Michael Labelle
December 4, 2025 AT 10:41It’s funny how the SEC acts like they’re protecting investors, but their biggest victims are the people who can’t access these markets at all. Meanwhile, the CFTC lets you trade futures like you’re betting on corn. That’s not protection-that’s normalization.
I think the real issue isn’t jurisdiction. It’s fear. The SEC fears losing control. The CFTC fears being irrelevant. The market? It just wants to trade.
Joel Christian
December 5, 2025 AT 04:30ok so like… SEC is just mad cause they dont get to tax it?? like why is this even a thing?? i thought the whole point of crypto was to get away from this crap??
jeff aza
December 7, 2025 AT 01:05Let’s be precise: the SEC’s enforcement actions are predicated on the Howey Test’s four prongs-investment of money, common enterprise, expectation of profit, and reliance on the efforts of others. The CFTC’s jurisdiction stems from the Commodity Exchange Act’s definition of ‘commodity’ under §1a(9), which includes ‘all services, rights, and interests’ in which contracts for future delivery are traded.
So yes, the SEC is overreaching on utility tokens that lack governance rights-but they’re not wrong on presale tokens with vesting schedules and team allocations. The CFTC, meanwhile, is playing a game of regulatory arbitrage by focusing exclusively on derivatives markets, ignoring the fact that spot markets are where 90% of volume occurs.
Neither agency has a coherent framework. The CLARITY Act is a band-aid. What we need is a digital asset classification statute with sunset clauses, tiered compliance, and a 2-year grace period for legacy projects.
Vijay Kumar
December 7, 2025 AT 09:02Everyone’s pretending this is about law. It’s not. It’s about power. The SEC wants control. The CFTC wants relevance. The market? It doesn’t care. It just wants to move.
Brian Bernfeld
December 9, 2025 AT 01:41Let’s be real-this isn’t a legal battle. It’s a cultural one.
The CFTC grew up with oil traders who bet on futures and shrugged when prices crashed. They don’t panic. They hedge.
The SEC? They’re ex-wall-street lawyers who still think ‘investor protection’ means stopping people from buying anything that looks like a pyramid scheme.
But here’s the twist: the CFTC’s spot ETH ETF approval? That’s not just regulatory-it’s a declaration of war. They’re saying, ‘We’re the grown-ups now.’ And the SEC? They’re still trying to prove they’re not obsolete.
Meanwhile, Coinbase’s lawyers are laughing all the way to the bank. They knew this would end in a whimper, not a bang.
Casey Meehan
December 9, 2025 AT 20:11ETH ETFs approved by CFTC?? 😎🔥 I knew it. The SEC is just scared they’ll lose their monopoly on Wall Street. Time to get with the times, guys. Crypto ain’t going away. 🚀
Tom MacDermott
December 10, 2025 AT 02:35Oh wow. The SEC is ‘backing off’? So what? They just got tired of losing in court. That’s not a policy shift-it’s a tactical retreat. The CFTC didn’t win. The SEC just realized they’re the guy yelling at the sky during a thunderstorm.
And let’s not pretend the CLARITY Act is some miracle. It’s a compromise written by lobbyists who still think ‘decentralized’ means ‘not registered with the SEC.’
Meanwhile, the real winners? The offshore exchanges and the VCs who already moved their ops to Singapore. The U.S. isn’t regulating crypto. It’s losing it.
Martin Doyle
December 10, 2025 AT 20:52Stop being so passive-aggressive. The SEC needs to be more aggressive. If you let people trade unregistered securities, you’re enabling fraud. The CFTC’s ‘regulate and tax’ approach is a joke-it’s just legalization by default. We need to shut down the bad actors, not give them ETFs.
Susan Dugan
December 12, 2025 AT 14:43Y’all are overcomplicating this. It’s like trying to decide if a skateboard is a vehicle or a toy. It’s both, depending on how you use it. The CFTC handles the ‘how much will it cost tomorrow?’ crowd. The SEC handles the ‘is this company going to make me rich?’ crowd.
Just label it. Clear rules. No more guesswork. And for god’s sake, stop suing exchanges for listing tokens that were never marketed as investments.
SARE Homes
December 12, 2025 AT 15:24Oh, so now the CFTC’s the hero?? They approved ETH futures in 2023 and now they’re the ‘responsible’ ones?? What about all the pump-and-dump schemes they ignored while chasing futures traders?? And don’t get me started on the ‘decentralized’ loophole-half these projects are run by 3 guys in a garage with a whitepaper and a Discord server.
Stop romanticizing regulation. Both agencies are broken. The market’s not waiting for Congress-it’s leaving.
Grace Zelda
December 13, 2025 AT 00:35I think the real tragedy here is that we’re still having this debate. We have the most brilliant coders, the most capital, the most users-and we’re stuck in a bureaucratic tug-of-war from the 1930s. The rest of the world is building. We’re debating.
Maybe the answer isn’t more laws. Maybe it’s less. Let the market decide. Let the tech evolve. Then regulate what’s actually happening-not what we think should be happening.
Sam Daily
December 13, 2025 AT 06:40Bitcoin and Ether are commodities. Everything else? If it smells like a security, acts like a security, and gets sold like a security… it’s a security. Simple.
Exchanges should be forced to label tokens like groceries: ‘This is a stock-like asset’ or ‘This is a digital good.’ No more hiding behind ‘utility’ labels.
And if the SEC wants to protect investors, they should focus on fraud-not innovation. Let the good stuff live.