Blockchain Groups Push SEC to Codify Digital Commodity Rules
Six major blockchain organisations have told the US Securities and Exchange Commission that interpretive guidance is not enough. In a joint letter submitted as the SEC's public comment window on its proposed crypto framework closed, Chainlink Labs, the Cardano Foundation, Hedera, Aptos Labs, Ava Labs, and the Stellar Development Foundation called on the regulator to embed digital commodity classification directly into the text of its proposed Regulation Crypto Assets. For accounting firms, auditors, and CFOs managing digital asset portfolios, the outcome of this lobbying effort will shape classification decisions, disclosure obligations, and reporting workflows for years to come. Robust crypto accounting software will be central to navigating whichever framework the SEC ultimately adopts.
What the Joint Letter Actually Says
The letter, dated 20 October 2026, carries a straightforward argument: the SEC already acknowledges, through existing interpretation, that digital commodities represent a distinct category of asset, separate from securities. The problem the signatories identify is that the proposed Regulation Crypto Assets framework does not make that distinction explicit in its operative text. Relying on interpretive positions that sit outside the rule itself, the groups argue, leaves market participants in a structurally uncertain position because interpretive guidance can be reversed, narrowed, or simply ignored in enforcement proceedings without the procedural protections that come with a formal rulemaking.
The Core Classification Ask
The organisations want the SEC to incorporate a clear digital commodity carve-out into the body of the proposed regulation. Their position is that a token meeting the criteria for a digital commodity should be explicitly excluded from securities treatment within the rule itself, not merely by reference to a staff statement or no-action letter. This matters because formal rules carry the weight of law after notice-and-comment rulemaking, while interpretive guidance does not bind courts or, in many cases, the Commission itself.
Secondary Markets, Staking, and Decentralised Networks
Beyond the headline classification ask, the letter raises two further areas of ambiguity. First, it calls for clearer guidance on how securities laws apply to secondary-market transactions once a token has been deemed a digital commodity at issuance. The concern is that a token could theoretically be treated as a non-security at launch but then attract securities characterisation when it changes hands on a secondary exchange, creating unpredictable compliance obligations at every point in a token's lifecycle.
Second, the signatories seek explicit treatment of staking and similar activities associated with decentralised networks. Whether rewards earned through staking constitute investment income subject to securities laws, or simply a protocol-level operational return, is a question with direct consequences for how firms account for those flows and whether they trigger broker-dealer or investment adviser registration requirements.
The SEC's Proposed Regulation Crypto Assets: Background
The SEC introduced its proposed Regulation Crypto Assets framework in August 2026. The consultation attracted more than 60 days of comment submissions from industry participants and legal academics, covering proposed exemptions for crypto offerings and a conditional safe harbour for certain tokens. The closing of that comment window, which coincided with the submission of this joint letter, signals that the Commission will now move toward reviewing submissions and, eventually, deciding whether to adopt, revise, or withdraw the proposed rules.
Where This Sits in the Broader US Regulatory Picture
The SEC's proposed framework does not exist in isolation. Congress has been working on parallel market structure legislation, and the CFTC maintains its own jurisdictional claim over digital commodities, particularly those that qualify as spot commodity contracts. The question of which regulator has authority over which token, and at which stage of its lifecycle, has been a source of friction between the two agencies for several years. Codifying digital commodity status within the SEC's own framework would, in principle, reduce that overlap, but it would also require the SEC to draw lines that it has historically been reluctant to fix in writing. For a fuller picture of how durable the SEC's and CFTC's recent pro-crypto rules really are, see our earlier analysis on the legal resilience of those positions.
Accounting and Financial Reporting Implications
For finance teams, the classification of a digital asset as a security versus a commodity is not an abstract legal question. It determines the accounting standard applied, the disclosure regime followed, and the tax treatment that flows from each transaction.
Balance Sheet Classification
Under current US GAAP, digital assets held by a company that do not qualify as financial instruments are generally treated as intangible assets and subjected to impairment-only accounting, unless the entity elects the fair value option under ASU 2023-08 for qualifying assets. A token classified as a security would, by contrast, fall under investment accounting guidance, potentially requiring mark-to-market recognition through the income statement depending on the entity's intent and holding period. Getting that initial classification wrong carries restatement risk.
Staking Rewards: Revenue or Return of Capital?
The letter's specific request for clarity on staking is particularly relevant for corporate treasury teams and asset managers holding proof-of-stake tokens. If staking rewards are characterised as a securities return, they may attract different disclosure and registration obligations compared with a treatment as ordinary protocol income. For tax purposes, the IRS has taken the position, in Revenue Ruling 2023-14, that staking rewards constitute ordinary income at the time of receipt at fair market value. The SEC's classification of the underlying activity could, however, affect the entity-level regulatory wrapper around that income, influencing whether additional filings or exemptions apply.
Secondary-Market Transaction Reporting
The secondary-market ambiguity flagged by the signatories also lands squarely in the lap of crypto bookkeeping software operators and finance teams. If a token transitions, even implicitly, from commodity to security treatment in secondary markets, every disposal would need to be assessed not just for capital gains purposes but for potential securities law implications, including whether the seller is acting as an unregistered dealer. Firms that have built their transaction-level reporting workflows around commodity assumptions may need to revisit their classification methodologies if the SEC's final rule does not resolve this point.
What Firms Should Do While the Rulemaking Proceeds
The comment window has closed, but the rule is not final. The SEC could take months, or longer, before issuing a final version of Regulation Crypto Assets, and it may significantly revise the proposal in response to the volume of comment letters received. In the meantime, the uncertainty the blockchain organisations have identified remains live. For what the broader rewriting of US crypto regulation means for firms in 2026, our detailed overview covers the full legislative and regulatory landscape.
Practical Steps for Accounting Firms and CFOs
The most defensible position firms can take right now is to document their classification rationale at the asset level, in writing, with reference to the current state of SEC guidance and the proposed framework. For each digital asset on the balance sheet, the working paper should capture: the basis for treating it as a security or a commodity, the accounting standard applied as a result, the tax treatment adopted, and a flag indicating whether the asset involves staking or significant secondary-market activity. That documentation serves a dual purpose: it supports audit evidence requirements, and it creates a clear change-log if the final rule requires a reclassification.
Firms using digital asset accounting software should also check whether their current tools can handle conditional classification workflows, where an asset might be re-tagged across a reporting period if regulatory status changes. Not all platforms handle mid-period reclassification gracefully, and the operational risk of mismatched classifications across a general ledger and a tax calculation engine is material.
Finally, staking exposures deserve a separate review. Any entity earning rewards from proof-of-stake tokens should model the tax and regulatory consequences under both a commodity treatment and a securities treatment, so that management understands the range of outcomes before the SEC settles the question formally.
Frequently Asked Questions
What is the SEC's proposed Regulation Crypto Assets framework?
It is a formal rulemaking proposal introduced by the SEC in August 2026 that sets out proposed rules for crypto asset offerings, secondary markets, and related activities. The comment period closed in October 2026, and the Commission will now review submissions before deciding on a final rule.
Why does digital commodity classification matter for accounting teams?
Classification determines which accounting standard applies, how gains and losses are recognised, what disclosures are required, and how transactions are reported for tax purposes. A security and a commodity follow different recognition and measurement rules, so an incorrect classification creates restatement and regulatory risk.
How does the staking question affect corporate treasury teams?
If staking is treated as a securities activity, it may carry additional registration or disclosure obligations at the entity level. For tax purposes, the IRS already treats staking rewards as ordinary income at receipt under Revenue Ruling 2023-14, but the SEC's characterisation of the surrounding activity could affect the regulatory wrapper and any related filing requirements.
What should a firm do if it holds tokens that might be reclassified?
Document the current classification rationale at asset level, apply the accounting standard consistent with that classification, and maintain a clear audit trail. Model the alternative treatment so that management understands the financial statement impact if the SEC's final rule requires a change. Review whether your digital asset accounting software can handle mid-period reclassification without creating ledger mismatches.
When might the SEC issue a final rule?
The SEC has not published a formal timeline. After a comment period closes, the Commission typically takes several months to review submissions, and may issue a revised proposal before finalising. Firms should plan for the current uncertainty to persist through at least 2027 and build their internal controls accordingly.
Source: Cointelegraph