US Regulators Draw the Line: What the SEC's New Token Taxonomy Means for UK Founders Tokenising Equity
Updated: Oct 7
On 17 March 2026, the US Securities and Exchange Commission and the Commodity Futures Trading Commission issued joint guidance that the digital assets industry has been waiting over a decade for. For the first time, the SEC formally defined different types of crypto assets and how the regulator will approach them, ending years of enforcement-by-litigation and replacing it with a clear taxonomy. The headline finding is direct: most crypto assets are not securities. The five-category framework The guidance establishes five formal categories. Four sit entirely outside securities law: digital commodities, digital collectibles, digital tools, and payment stablecoins. Only the fifth category, digital securities, falls under the SEC's remit. Sixteen major tokens have been explicitly named as digital commodities, including Bitcoin, Ethereum, Solana, XRP, Cardano and Chainlink (now under CFTC oversight, not the SEC). Activities including staking, protocol mining and airdrops have been cleared as non-securities transactions. What this means for tokenised equity Here is the critical point for UK founders: tokenised equity sits squarely in that fifth category: digital securities. Traditional company shares represented as digital tokens are still securities. This guidance does not change that. What it does change is the clarity of the conversation. The guidance confirms what the FCA's own cryptoasset regime is moving towards: a clear, workable distinction between crypto assets that function like commodities, and those that represent genuine ownership stakes in companies. Tokenised equity is the latter. It always was. The safe harbour proposal On 18 August 2026 the SEC proposed Regulation Crypto Assets, which includes a safe harbour allowing smaller startups to raise up to $5 million over four years without immediate securities law exposure, with more established companies able to raise up to $75 million per 12-month period. It covers investment contracts linked to non-security crypto assets and does not cover digital securities such as tokenised equity. This is significant. A formal safe harbour for early-stage tokenised raises, if mirrored in UK regulation, would materially lower the barrier to entry for founders exploring tokenised equity. The UK parallel The SEC's guidance does not apply in the UK. But it matters here. The FCA's application window for its new cryptoasset regime opened on 30 September 2026, and the regime comes into force on 25 October 2027. PISCES launched in 2025. HM Treasury is actively consulting on tokenised securities. The direction of travel mirrors what the US just formalised. Regulators on both sides of the Atlantic are moving toward the same conclusion: tokenised financial instruments deserve their own clear regulatory framework, distinct from speculative crypto assets. The question for UK founders is no longer whether that framework is coming. It is how fast, and whether you are ready for it. The founders who understand that distinction now will be better positioned than those waiting for complete certainty before moving. For legal and regulatory guidance specific to your situation, speak to a qualified adviser. TokenisingStartups.com does not provide legal advice.
What has happened since March
The 17 March 2026 document was an interpretation, published by the SEC as release 33-11412, rather than a new rule. It applies the long-standing Howey test and explains when a non-security crypto asset can become subject to an investment contract, for example where an issuer promises managerial efforts that buyers reasonably expect to generate profits. According to Jones Day's analysis, that link ends once those promises are fulfilled, or once the issuer clearly and publicly fails to meet them.
The offering framework came later. On 18 August 2026 the SEC proposed Regulation Crypto Assets (release 33-11434). As summarised by Akin Gump, it contains a startup exemption of up to $5 million over four years and a fundraising exemption in two tiers: up to $20 million and up to $75 million per 12-month period, with audited financial statements required at Tier 2. The comment period runs for 60 days after publication in the Federal Register.
One detail matters for anyone tokenising shares. The proposal covers investment contracts linked to non-security crypto assets. It does not govern digital securities, so tokenised equity would still rely on existing US routes such as registration or the established private placement exemptions.
What it means for UK founders
The UK is drawing a similar line between categories, on its own timetable. HM Treasury made the Cryptoasset Regulations in February 2026, the FCA published its final policy statements in June 2026, and the FCA authorisation window opened on 30 September 2026. The new regime comes into force on 25 October 2027, according to Clifford Chance.
The UK regulations treat qualifying cryptoassets separately from cryptoassets that are already specified investments under FSMA, such as tokenised shares. A UK company issuing tokenised equity therefore stays inside the existing securities framework: prospectus rules, financial promotion restrictions and, where shares are traded, regulated venues, PISCES or the Digital Securities Sandbox. The PRA has also said tokenised traditional assets should generally be treated like their non-tokenised equivalents.
For founders with US investors in view, the practical point is that neither the US taxonomy nor the proposed US exemptions create a lighter route for tokenised shares. Founders planning a cross-border raise may want to take professional advice in both jurisdictions before settling on a structure.
Key facts at a glance
17 March 2026: SEC and CFTC issue a joint interpretation on crypto asset classification (SEC release 33-11412).
Five categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities.
Stocks, bonds or notes recorded on a blockchain remain securities regardless of format.
18 August 2026: SEC proposes Regulation Crypto Assets, with a $5 million startup exemption and $20 million and $75 million annual tiers.
30 September 2026 to 28 February 2027: FCA authorisation window for UK cryptoasset firms.
25 October 2027: the new UK cryptoasset regime comes into force.
Sources
Frequently asked questions
What is the SEC and CFTC token taxonomy published in March 2026?
On 17 March 2026 the SEC and CFTC issued joint guidance setting out five categories of crypto asset. Digital commodities, digital collectibles, digital tools and payment stablecoins sit outside securities law, while only digital securities fall under the SEC's remit.
Is tokenised equity a security under the SEC token taxonomy?
Yes. Tokenised equity falls in the digital securities category, because company shares represented as digital tokens are still securities. The guidance does not change that, but it clarifies the distinction between commodity-like crypto assets and tokens that represent ownership in companies.
Which tokens did the SEC name as digital commodities?
Sixteen major tokens were named as digital commodities under CFTC oversight, including Bitcoin, Ethereum, Solana, XRP, Cardano and Chainlink. Staking, protocol mining and airdrops were also cleared as non-securities transactions.
What is the SEC safe harbour proposal for token raises?
On 18 August 2026 the SEC proposed Regulation Crypto Assets, which includes a safe harbour allowing smaller startups to raise up to $5 million over four years without immediate securities law exposure, with more established companies able to raise up to $75 million per 12-month period. It does not cover digital securities such as tokenised equity.
Does the SEC token taxonomy apply to UK founders?
No, the SEC guidance does not apply in the UK. However, the UK is moving in a similar direction: the FCA's application window for its new cryptoasset regime opened on 30 September 2026 and the regime comes into force on 25 October 2027, PISCES launched in 2025 and HM Treasury is consulting on tokenised securities.
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