Is cryptocurrency a security? (Introduction)

law and ledger is a news corner focused on cryptocurrency legal news. Kelman Law – A law firm focused on digital asset commerce.

The following opinion editorial was written for Kelman.Law by Alex Forehand and Michael Handelsman.

Is cryptocurrency a security? Why this question still matters in 2025

The question of whether crypto assets qualify as securities will be familiar to anyone who deals with digital assets. Since then, it has been questioned at crypto conferences, Congressional hearings, SEC speeches, courtrooms, and thousands of legal memos. SEC vs. W.J. Howey Co. It became the principle of last resort for any new technology.

But in 2025, despite years of regulatory activity, the U.S. landscape remains fragmented and the answers remain unclear. courts are increasingly rejected The idea is that a token is essentially a security, distinguishing between the asset itself and the circumstances of its sale. other judgmentHowever, even years later, long after decentralization milestones and utility features were introduced, investment contracts were found to be responsible for situations far removed from the initial token generation event.

The SEC’s stance is shiftedambiguity remains. The agency’s expansive enforcement approach since 2017 has created a default assumption that nearly all token issuances can trigger securities laws.

Recently, however, we have seen clearer signs of restraint, a greater willingness to negotiate exemptions and settlement terms, and internal signals that staff are starting to differentiate between token design, token distribution, and token ecosystems in ways that have not been sufficiently articulated in the past.

However, formal guidance does not yet exist.

Congress continues to debate comprehensive digital asset legislation, but none has emerged with the consensus needed to preempt the judiciary or rein in the SEC. on the other hand, clarity method As it continues to make its way through Congress, market participants will be operating within a patchwork of federal enforcement interpretations, civil precedent, and an evolving regulatory classification.

This series of articles aims to clarify what is realistically known in 2025 and what can be done defensively. We distill the legal framework, highlight recent developments and identify practical takeaways for builders, investors and intermediaries navigating this uncertain environment.

Part 1 discusses when securities laws apply to tokens, focusing on the mechanics and limitations of the infamous Howey test.

Part II discusses the myths and realities of utility tokens.

Part III analyzes token trading throughout its lifecycle, including when secondary market trading is unsatisfactory. Howie Even though it could have been sold earlier.

Part IV considers special situations (DeFi protocols, staking arrangements, airdrops, NFTs, hybrid models) where traditional testing becomes burdensome under modern design choices.

Part V examines the evolving regulatory landscape toward the end of 2025: SEC enforcement patterns, CFTC position, and pending legislation.

Part VI provides practical compliance guidance for exchanges, token issuers, developers, DAOs, custodians, payment companies, and other companies operating in this space.

The goal is not to provide certainty where there is none, but to translate legal doctrine, case law, and regulatory practice into concrete, defensible steps for navigating U.S. securities laws that align with actual enforcement and court functions.

Staying informed and compliant in this evolving landscape is more important than ever. Whether you are an investor, an entrepreneur, or a company involved in cryptocurrencies, our team is here to help. We provide the legal counsel you need to navigate these exciting developments. If you think we can help, please schedule a consultation here.