For more than a decade, US agencies and courts have treated Bitcoin as something other than an investment contract. The CFTC has treated it as a commodity since 2015. The SEC approved spot Bitcoin ETFs in January 2024.

And in March 2026, the SEC went further. In a formal interpretation joined by the CFTC, it named Bitcoin as a "digital commodity" and said digital commodities are not securities.

That doesn't mean securities law never touches Bitcoin. A fund selling shares in a pool of Bitcoin is selling a security. So is a promoter who sells an investment built around someone else's work with Bitcoin. But the coin itself, moving on the network, is not a share of anything.

This article is general legal analysis. It is not legal or investment advice.

Key takeaways

• Bitcoin is not a security. The SEC and CFTC formally classified it as a digital commodity on 17 March 2026.
• The legal test is Howey, and Bitcoin fails its key element: there is no company or team whose work produces your return.
• Spot Bitcoin ETF shares are securities. The Bitcoin they hold is not.
• Different agencies use different labels for Bitcoin: commodity (CFTC), non-security (SEC), property (IRS), and value that can be transmitted (FinCEN). They don't contradict each other.
• The SEC's March 2026 position is an interpretation, not a law. Congress has not yet passed a statute on it.

The Howey test

The question of what counts as a security comes from a 1946 Supreme Court case, SEC v. W.J. Howey Co.

The Court held that an "investment contract," and therefore a security, exists when someone invests money in a common enterprise, expecting profits from the efforts of others. In Howey, the scheme was the sale of citrus grove plots bundled with a contract for the company to cultivate and market the fruit.

Here is how each part applies to Bitcoin.

Investment of money. Buying Bitcoin involves money. That part is met.

Common enterprise. This is already a weak fit. Bitcoin holders don't have a claim on any company. They hold units the network accepts when a transaction carries a valid signature.

Profits from the efforts of others. This is where the argument falls apart. Bitcoin's price goes up and down, just like the price of copper or gold. But there is no company, foundation, CEO, or roadmap whose work drives that price. Betting on a market price is not the same as relying on a promoter to run a business for you.

That is why the SEC's long enforcement campaign focused on companies that issued their own tokens, not on Bitcoin.

What the SEC decided in March 2026

On 17 March 2026, the SEC issued a formal interpretive release on how securities law applies to crypto assets. The CFTC joined it.

The release sorts crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. Only the last category is a security by nature.

It explicitly lists Bitcoin as a digital commodity, alongside Ether, Solana, XRP, and several other tokens. It defines a digital commodity as an asset whose value comes from the operation of a functioning network and from supply and demand, rather than from the managerial work of others.

The release also explains that a non-security asset can be sold as part of an investment contract (for example, in a promoter's scheme) without becoming a security itself.

One caveat matters. An interpretive release is not a law or a formal rule. A future Commission could revisit it. It reflects how the SEC applies Howey today.

How each agency treats Bitcoin

CFTC (Commodity Futures Trading Commission)

• Treats Bitcoin as: a commodity.
• What that controls: Bitcoin futures markets, plus authority to act against fraud and manipulation in the spot market.

SEC (Securities and Exchange Commission)

• Treats Bitcoin as: a digital commodity, not a security. Products that package Bitcoin can be securities.
• What that controls: spot Bitcoin ETFs, funds, and brokers dealing in securities.

IRS (Internal Revenue Service)

• Treats Bitcoin as: property.
• What that controls: capital gains, income, and cost basis.

FinCEN (Financial Crimes Enforcement Network)

• Treats Bitcoin as: value that users can hold and businesses can transmit.
• What that controls: money services business registration under its 2013 guidance (FIN-2013-G001).

These labels don't conflict. Each agency answers a different legal question.

Bitcoin ETFs: the wrapper versus the asset

The SEC approved spot Bitcoin exchange-traded products in January 2024. They now trade on major US exchanges.

Those ETF shares are securities. But holding Bitcoin inside a trust doesn't turn the Bitcoin into a security. The share you buy on an exchange is a security because it is a share in a fund.

People mix up the wrapper and the asset all the time. They are different legal objects.

Cases that look like Bitcoin cases, but aren't

A company sells its own token. A startup raises money by selling a token it created, and its team promises to build a platform. Howey can apply to that token, and courts have found securities in several cases like this.

An exchange lists many tokens. In recent years, the SEC argued that some trading platforms were operating as unregistered securities exchanges because of the other tokens they listed. Those cases were about those tokens and those platforms. The fact that a platform also offered Bitcoin trading never made Bitcoin a security.

In the SEC's case against Coinbase, a federal court in New York ruled in March 2024 that offering a self-custody wallet did not make the company an unregistered broker. The SEC later dropped the case entirely in February 2025.

A simple check: if a headline says "SEC says crypto is a security," ask which asset or which product it means. If the answer is "all of it," the headline is wrong.

What Congress has and hasn't done

The Digital Asset Market Clarity Act (CLARITY Act) was meant to write a clearer dividing line between the SEC and the CFTC into federal law. It failed a Senate procedural vote on 15 September 2026.

That leaves the current system in place: court decisions, agency guidance, and the SEC's March 2026 interpretation. It does not turn Bitcoin into a security.

H.R. 8957, the Strategic Bitcoin Reserve bill, is about how the government holds its own Bitcoin. It doesn't change Howey or Bitcoin's classification.

Why the distinction matters

If Bitcoin were a security, every purchase would bring in securities rules built for stocks: broker-dealer registration, disclosure requirements, and transfer agents. The Bitcoin network could not meet those requirements. That has never been how Bitcoin operates in the US.

The costs holders actually face come from elsewhere: tracking tax lots, identity checks at exchanges, and compliance rules on the platforms they use. None of those depend on Bitcoin being a security.

The practical rule is simple. Bitcoin you hold is property. A financial product that gives you exposure to Bitcoin (an ETF share, a note, a managed account) is judged on its own terms, and that is where securities law applies.

Conclusion

Bitcoin is not a security. It is traded as a commodity, taxed as property, and since March 2026, formally classified by the SEC and CFTC as a digital commodity. Products built on top of it can still be securities.

If you are raising money around a token you control, you are in a different legal situation. Bitcoin's classification does not extend to a project with a team, a foundation, and a pitch deck.

To follow how the SEC, the CFTC, and Congress keep reshaping these rules, subscribe for free to The Bitcoin Act at thebitcoinact.xyz.

FAQ

Is Bitcoin a security in the United States?
No. The SEC and CFTC classified Bitcoin as a digital commodity, not a security, in a joint interpretation on 17 March 2026. Shares of a fund that holds Bitcoin are securities.

Is Bitcoin a commodity?
Yes. The CFTC has treated Bitcoin as a commodity since 2015, which is why Bitcoin futures trade on CFTC-regulated exchanges.

Does Howey apply to Bitcoin mining?
Mining produces new Bitcoin through computing work, and selling mined Bitcoin is a sale of property. Hosted mining contracts or pool arrangements sold as investments can raise separate questions, depending on how they are structured.

If the CLARITY Act never passes, does Bitcoin become a security by default?
No. Without new legislation, the current rules stay in place, including the SEC's March 2026 interpretation.

Are Lightning Network channels securities?
A Lightning channel is a technical way to move Bitcoin. 

Disclaimer: This article is provided for general information and educational purposes only. It does not constitute legal, tax, or financial advice, and nothing here is written in a professional capacity. Laws and regulations change frequently and differ by jurisdiction, and some of the rules described above may have changed since publication. Always check the primary sources and consult a qualified professional in your jurisdiction before making any decision. The Bitcoin Act accepts no liability for any action taken on the basis of this content.