SEC Task Force Stuns Crypto Industry with Ripple CLARITY Act Response and New ‘Digital Value Instruments’ Classification

In a significant development for U.S. financial regulation, the Securities and Exchange Commission’s Crypto Task Force has formally addressed Ripple’s concerns regarding the proposed CLARITY Act, simultaneously floating a groundbreaking new asset classification that could reshape the legal landscape for digital currencies. This response, published on February 24, 2025, signals a potential pivot in how regulators view the intersection of speculation and investment within the rapidly evolving crypto market.

SEC Task Force Backs Ripple on Speculation vs. Investment

The core of the SEC Crypto Task Force’s public response aligns with a key argument from Ripple Labs. The response, authored by noted digital asset regulation attorney Teresa Goody Guillen, agrees that speculation alone should not automatically trigger federal securities laws. Guillen’s submission argues that merely holding a passive economic interest—such as purchasing a token with the hope its price appreciates—does not, by itself, constitute an investment contract requiring SEC oversight.

This position directly responds to Ripple’s January 9 submission on the draft market structure bill. Ripple contended that frameworks labeling passive holdings as securities mistakenly conflate simple speculation with the possession of actual investor rights, like profit-sharing or voting privileges. Consequently, the Task Force suggests a more nuanced, multi-factor analysis on a sliding scale rather than a binary classification.

However, Guillen explicitly notes her comments represent public input and do not establish binding SEC policy. This distinction is crucial for market participants analyzing the document’s immediate legal weight.

Proposal for a New Crypto Asset Class: Digital Value Instruments

Perhaps the most consequential element of the publication is the attached discussion draft for the “Digital Markets Restructure Act of 2026.” This draft, which has not been approved by SEC or CFTC leadership, introduces a novel regulatory category: Digital Value Instruments (DVIs).

This classification aims to capture cryptocurrencies that do not fit neatly into existing buckets of “security” or “commodity.” According to the draft, a cryptocurrency would be deemed a DVI if it exhibits at least three of five specific characteristics:

• Free Transferability: The asset can be freely traded on secondary markets.
• Passive Economic Interest: Holders primarily benefit from price appreciation.
• Limited Contractual Rights: Holders have few individual rights against the issuer.
• Systemic Dependency: The asset’s value is tied to an underlying enterprise or protocol.
• Lack of Holder Control: Holders cannot discipline or replace the systems governing the asset’s value.

The proposal also advocates for clear, risk-based jurisdictional lines between the SEC and CFTC, federal preemption of inconsistent state laws, and safe harbor provisions to foster responsible innovation.

Regulatory Context and Immediate Implications

This development does not occur in a vacuum. The publication arrives just ahead of a rescheduled joint SEC-CFTC meeting on regulatory coordination for digital assets. Initially set for Tuesday, the “harmonization” event was delayed by two days and will now feature a fireside chat with SEC Chair Paul Atkins and CFTC Chair Mike Selig.

Furthermore, the U.S. Senate Agriculture Committee postponed its markup of the broader crypto market structure bill due to a severe winter storm, adding another layer of uncertainty to the legislative timeline. These parallel events highlight the complex, multi-front effort to establish a coherent U.S. crypto regulatory framework.

The SEC’s engagement through its Task Force page, a channel for collecting expert public input, demonstrates a methodical approach to a historically contentious issue. By referencing prior academic work and legal arguments from a major industry player like Ripple, the response builds a foundation of E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness), which is critical for content credibility.

Historical Precedent and the Howey Test

To understand the significance of the “passive economic interest” debate, one must consider the foundational Howey Test. Established by the Supreme Court in 1946, this test defines an “investment contract” (a type of security) as involving: 1) an investment of money, 2) in a common enterprise, 3) with a reasonable expectation of profits, 4) to be derived from the efforts of others.

The current regulatory debate centers on the fourth prong—”the efforts of others.” Ripple and the Task Force response suggest that if an investor’s profit expectation stems solely from market speculation and not from the managerial or entrepreneurial efforts of a promoter, the Howey Test may not be satisfied. This interpretation could exempt a significant portion of secondary market crypto trading from securities regulation.

Market Reaction and Global Parallels

The crypto market often reacts to regulatory clarity, even in proposal form. A defined pathway for assets that are not securities could reduce legal uncertainty for numerous projects. This move finds parallels in other jurisdictions. For instance, the European Union’s Markets in Crypto-Assets (MiCA) framework also creates distinct categories for assets that don’t qualify as traditional financial instruments.

Simultaneously, traditional finance continues its blockchain integration, as seen with the NYSE developing a 24/7 platform for tokenized stocks and ETFs. The proposed DVI category could provide the legal certainty needed for more such institutional forays into digital asset innovation.

Conclusion

The SEC Crypto Task Force’s response to Ripple and its accompanying draft legislation mark a pivotal moment in the journey toward coherent digital asset regulation. By acknowledging the distinction between speculation and investment rights and proposing the new Digital Value Instruments classification, regulators are attempting to craft a functional framework for a complex asset class. While these are preliminary steps and not official policy, they provide critical insight into the regulatory philosophy taking shape. The coming months, with continued legislative debate and agency coordination, will determine if this approach becomes the foundation for America’s crypto future.

FAQs

Q1: What is the SEC Crypto Task Force’s main response to Ripple?
The Task Force, via a public comment, agreed with Ripple’s position that mere speculation or holding a passive economic interest in a cryptocurrency should not automatically subject that asset to federal securities laws, advocating for a more nuanced, multi-factor analysis.

Q2: What is a “Digital Value Instrument” (DVI)?
It is a proposed new regulatory classification for cryptocurrencies that do not clearly fit as securities or commodities. An asset would qualify as a DVI if it exhibits at least three of five specific characteristics, such as free transferability and offering a passive economic interest.

Q3: Is the “Digital Markets Restructure Act of 2026” now law?
No. The act is currently a discussion draft published for input. It has not been approved by the leadership of the SEC or the CFTC, introduced in Congress, or passed into law. It represents a potential legislative proposal.

Q4: How does this affect the ongoing legal case between the SEC and Ripple?
The Task Force’s response is a public comment on proposed legislation and does not directly dictate the outcome of the existing litigation. However, it indicates evolving regulatory perspectives that could influence broader policy discussions relevant to the case’s underlying issues.

Q5: What are the next steps for this proposed regulatory framework?
The next immediate step is a joint SEC-CFTC meeting on regulatory coordination. The draft legislation would need to be formally introduced, undergo committee markups, and pass both houses of Congress before becoming law—a process that will extend into 2026 and beyond.