The Blockchain Association is urging the United States Securities and Exchange Commission (SEC) to stop classifying cryptocurrencies as stocks and bonds. The organization is advocating for legislation specifically designed for digital currencies, as it believes that applying outdated regulations to modern technology is counterproductive.
Why This Matters
The Blockchain Association represents over 100 blockchain businesses in America. Last week, they wrote an influential letter to SEC officials maintaining that the vast majority of digital assets shouldn’t be regulated by the SEC. They’re angry with what they refer to as the SEC’s “regulation by enforcement” method, where regulation appears to occur via lawsuits and not clear regulations.
“Applying a test from 1946 to control today’s digital assets reflects a fundamental lack of understanding about how this technology functions,” Blockchain Association leader Sarah Williams said. Decentralized networks operate in a different way than firms that sell stock, and applying the same treatment to them will simply drive innovation overseas.”
The “Howey Test” she referred to is from an ancient Supreme Court case and assists in defining what constitutes an investment contract that the SEC can regulate. Most experts claim this test was not intended for **crypto tokens** and does not apply well.
The Problem: Unclear Rules
The American crypto industry is becoming more and more frustrated because they don’t know precisely what regulations to abide by. A number of high-profile court cases involving crypto exchanges and businesses have demonstrated that regulators and businesses don’t agree on what these digital assets are under the law.
“It’s virtually impossible for American blockchain entrepreneurs to create businesses when the rules are so ambiguous,” said Michael Chen of our Regulatory Research Division. “Our companies invest enormous funds in lawyers just to determine whether they can do business, while companies elsewhere get on with more defined guidelines.”
This ambiguity has led numerous crypto startups out of the US and into countries such as Singapore, Switzerland, and the UAE, where the regulations for digital currencies are clearer.
A Better Way: Rules That Fit
The Blockchain Association is not calling for no rules. Rather, they want rules that recognize how blockchain technology really functions and safeguard consumers without halting innovation.
Their solution is straightforward: establish clear categories for various types of digital assets. Classic securities regulations can be used only for tokens that actually function like company stock. For utility tokens (which behave more like digital tools) and decentralized networks, they propose rules emphasizing transparency and equitable markets rather than the cumbersome registration process stocks demand.
“We need to find a middle ground between no rules and treating every digital token as a stock,” stated Rep. Thomas McHenry, who favors developing crypto-specific regulations. A recent report by Forbes Digital Assets indicated that over 80% of industry leaders opine that appropriately customized rules would actually enhance consumer confidence and market stability.
Growing Support from Both Political Parties
Politicians from both parties are increasingly interested in establishing clear regulations for the digital asset ecosystem. There have been a number of bills regarding crypto regulation proposed in Congress, but a total overhaul hasn’t yet gained traction.
As reported by Our Market Intelligence team, this is “a pivotal moment for America’s preeminence in the blockchain industry.” Their data indicate that the choices made in the next couple of years may decide whether the US stays ahead in the field of financial technology or lags behind the rest of the world.
Support for improved regulations also emanates from unexpected quarters. The Chamber of Digital Commerce has just published a report demonstrating that the present vague regulations are costing America $10-15 billion annually in lost business and innovation opportunities.
Up to now, the SEC has not formally reacted to the Blockchain Association’s offer. However, individuals who are close to the matter state that mounting political pressure and the growing significance of the crypto market could ultimately compel regulators to collaborate more with the industry.
“The actual question is not whether or not cryptocurrency will be regulated, but what kind of regulation,” Williams said. “We’re simply asking for regulations that see how these technologies actually work rather than trying to apply out-of-date paradigms from the last century.”As more ordinary folks and large institutions invest in digital assets, industry players assume pressure will also mount for an even balance protecting consumers without foreclosing on opportunities for innovation and growth.
I am Toby Rothschild, Co-Founder of Spearmint and author at Coinography, and a strategist focused on advancing Web3 innovation, digital ecosystems, and the future of decentralized technology. I combine product thinking, creative leadership, and deep interest in emerging trends to help shape how individuals and organizations interact with the next generation of digital systems.
My work centers on understanding how blockchain, AI, and digital identity are reshaping global industries. At Spearmint, I help lead the direction of initiatives that bring clarity, structure, and meaningful user experiences to complex technological environments. I focus on bridging vision with execution, ensuring that innovation remains practical, scalable, and aligned with long-term growth.
As an author at Coinography, I create insights that translate fast-moving Web3 developments into clear, useful narratives. I explore topics such as decentralized governance, digital identity, creator economies, token models, protocol design, and the shifting cultural patterns around emerging technology. My aim is to make digital transformation more understandable and approachable for a wider audience.
I believe that Web3 is not only a technological shift but a cultural and creative one. Strong ideas, thoughtful communication, and human-centered design will shape which technologies thrive and how communities evolve around them. My writing and research reflect this belief, focusing on clarity, relevance, and long-term perspective.
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