An Overlooked Development: Analyst Says SEC and CFTC Decision on Cryptocurrencies Officially Marks the End of Gary Gensler’s Era

Galaxy Research Head of Research Alex Thorn stated that there has been a significant shift in the regulatory approach to cryptocurrency markets in the US.

According to Thorn’s assessment, the new digital asset classification guidance published by the SEC and CFTC signals the effective end of the long-criticized “Gensler era” regulatory approach.

The published guidance provides a clearer framework for the sector by classifying digital assets under five main categories. Accordingly, digital assets are categorized as: digital commodities, digital collectibles, digital utility assets, stablecoins, and digital securities. A particularly noteworthy point in the regulation is that only assets falling into the digital securities category are considered securities and therefore subject to federal securities laws, while other categories are excluded.

The new guidance reportedly replaces the “investment contract” analysis approach adopted in 2019 under Gary Gensler. Published in the Federal Register, this interpretive rule explicitly pushes the previous framework into the background, drawing clearer boundaries regarding the legal status of crypto assets.

The guidelines also state that tokens may cease to be considered securities under certain conditions. Accordingly, if the issuer fulfills its essential governance obligations under the project, the investment contract terminates, and the token can be traded on secondary markets without being classified as a security. Similarly, this status ends if the project is abandoned or if the issuer remains silent for an extended period.

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The regulation clarifies that airdrops, mining, and staking activities will generally not be considered securities transactions, and that packaging or converting an asset into a different form will not change its legal status. This provides significant clarity, particularly for projects operating in the DeFi and tokenization sectors.

Alex Thorn stated that the guidance provides critical clarity regarding institutional investor participation in crypto markets, and that this step could be the beginning of a more constructive regulatory approach towards the sector. However, Thorn also pointed out that interpretive rules do not have binding legal force and can be easily changed by a new administration. Therefore, the sector continues to support the implementation of regulations such as the CLARITY Act for a more permanent regulatory framework.

*This is not investment advice.

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