Detailed Explanation of SEC Chairman's Cryptocurrency Asset Classification: NFTs, Utility Tokens, and Digital Tools Are Not Securities

On November 13th, the Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, elaborated today on his cryptographic "Token Classification Framework" plan to clearly differentiate which cryptocurrencies are regarded as securities. In the SEC's press release, Paul Atkins mentioned his current viewpoints on various types of crypto assets. It can be summarized as that Atkins only emphasizes that tokenized products are securities. Non-fungible tokens (NFTs), network tokens (ETH, SOL), and "functioning" "digital tools" (such as identity verification) are not considered securities. His views are detailed as follows: "Digital Commodities" or "Network Tokens" are not securities. Their value is fundamentally related to the programmatic operation of a "fully functional" and "decentralized" cryptographic system and arises from it, rather than from the expected profits of others' key managerial efforts. "Digital Collectibles" are not securities. These assets are intended for collecting and/or use by individuals and may represent or confer rights to digital expressions or references to art, music, videos, trading cards, in-game items, or internet memes, personalities, current events, or trends. Buyers of digital collectibles do not expect to profit from the daily managerial efforts of others. "Digital Tools" are not securities. These crypto assets have practical functions, such as memberships, tickets, certificates, ownership proofs, or identity badges, and buyers of digital tools do not expect to profit from the daily managerial efforts of others. "Tokenized Securities" are currently and will continue to be securities. These crypto assets represent ownership of financial instruments listed in the "securities" definition and are maintained on a cryptographic network. Paul Atkins stated that this list is not exhaustive and will be further refined in the future.