The chairman of the U.S. SEC announced the "Token Classification Act" plan to clearly distinguish whether cryptocurrencies are considered securities

According to The Block, SEC Chairman Paul Atkins elaborated on his plan for a "token classification" to clearly distinguish which cryptocurrencies are considered securities, while the SEC is advancing digital asset regulation in a new way.

Paul Atkins stated that the classification will be based on the Howey Test. The Howey Test originates from a 1946 U.S. Supreme Court ruling, which the SEC frequently cites to determine whether an asset constitutes an investment contract and is therefore considered a security.

Paul Atkins further added that cryptocurrencies can be part of an investment contract, but that does not mean they will always be so.