On July 9, 2025, Commissioner Hester Peirce, head of the SEC’s Crypto Task Force, in a published statement said, “Tokenized securities are still securities.” And, as such, the federal securities laws apply to transactions involving them.
In her statement, Commissioner Peirce allowed, “As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset.”
Legal Tokens
A point well taken. Particularly coming from Commissioner Peirce, on whom the crypto industry has bestowed the nickname “Crypto Mom” for her support of blockchain and cryptocurrencies. And a good reminder that the legal status of an asset will not change just because it resides on a blockchain.
It is also a point worth remembering when considering the degree of comfort issuers, market intermediaries, and investors can take from recent statements issued by the SEC’s Division of Corporation Finance concerning meme coins, mining activities, and stablecoins. The statements are useful guides for how SEC staff might analyze tokens with certain features, but they are limited in scope, and repeatedly emphasize that a traditional securities law analysis, including under the Howey test for an investment contract, should be considered before transacting in such tokens.
Consider the narrow scope of the Division’s statement on meme coins: First, it defines meme coins out of the securities laws.1 Then it concludes the offer and sale of meme coins would not constitute a security under the Howey test. And finally, it warns that the statement does not extend to meme coins that do not fit into that platonic ideal of a non-security.2
The Division’s conclusion that mining activities (either solo or through mining pools) do not constitute securities transactions under the Howey test is confined to proof-of-work mining of “Covered Crypto Assets” on public, permissionless networks. One footnote indicates that the Division’s guidance applies only to Covered Crypto Assets that are not themselves securities,3 and another warns that the securities law status of mining activities will depend on the specific facts and circumstances involved.4
The Division’s statement on stablecoins is limited to what it calls “Covered Stablecoins”—those pegged to the U.S. dollar on a one-to-one basis; with no limitation on the amount the issuer mints or redeems; that do not entitle a holder to interest, profit, or other returns; and backed by low-risk, liquid assets in a reserve that meets or exceeds the redemption value of tokens in circulation.5 The statement concludes that stablecoins that meet this strict definition are not securities.6 Then warns that the securities law status of any given stablecoin, even one that seemingly fits the definition of a Covered Stablecoin, will depend on the specific facts and circumstances involved.7
As we said at the outset, the Division’s statements are helpful. They establish lanes in which issuers, market intermediaries, and investors can operate safely without fear that they may find themselves subject to an SEC enforcement action. But the lanes established are quite narrow.
Furthermore, a future Commission—one more wary of risks blockchain and cryptocurrencies may present to the market and investors—may point to these very same statements to say: You were warned. You were told where the lines are. And you colored outside the lines.
When in doubt, it is always advisable to seek guidance.
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1 “The offer and sale of meme coins does not involve an investment in an enterprise nor is it undertaken with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts or others.”
2 Notwithstanding the foregoing, this statement does not extend to the offer or sale of meme coins that are inconsistent with the descriptions set forth above, or products that are labeled “meme coins” in an effort to evade the application of the federal securities laws by disguising a product that otherwise would constitute a security. As noted above, the Division will evaluate the economic realities of the particular transaction.”
3 “This statement only addresses certain activities involving Covered Crypto Assets that do not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise.”
4 “The Division’s view is not dispositive as to whether any specific Mining Activity (defined in the statement) involves the offer and sale of a security. A definitive determination requires analyzing the facts relating to the specific Mining Activity.”
5 “The Division expresses a view only as to Covered Stablecoins described in this statement. We do not express a view regarding the application of the federal securities laws to any other types of stablecoins, including those that are intended to track the value of reference assets other than USD, such as non-USD fiat currencies, commodities, other crypto assets, or those with alternative stability mechanisms like algorithmic stablecoins. We also do not express a view regarding stablecoins that are intended to track the value of USD and can be redeemed for assets other than USD. Further, we do not express a view regarding the application of the federal securities laws to “yield-bearing stablecoins.” Which are stablecoins providing holders with yield, interest or other passive income, whether in the form of regular payments or rewards, or in the form of ‘re-basing,’ which is a mechanism that automatically adjusts the total supply of the stablecoins.”
6 Either under the Howey test for an investment contract, or under Reves v. Ernst & Young, 494 U.S. 56 (1990), which held that all notes are presumed to be a security unless, pursuant to a multi-factor test, they bear a “family resemblance” to certain types of notes issued in connection with commercial (non-investment) transactions. Under Reves, a court will consider the motivations of the buyer and seller, the plan of distribution of the instrument, the reasonable expectations of the investing public, and whether there are risk-reducing features such that the application of the federal securities laws is unnecessary.
7 “The Division’s view is not dispositive of whether any stablecoin, including a Covered Stablecoin, is offered or sold as a security. A definitive determination requires analyzing the facts relating to the specific stablecoin and the circumstances surrounding its offer and sale. Where facts vary from those presented in this statement, the Division’s view as to whether the specific stablecoin is offered or sold as a security may be different.”