How to Structure a Token Launch After the SEC/CFTC Interpretation
TGE prep, the Wyoming DUNA, and Why Pre-2026 Sales Still Matter
by
Teddy Ellison
AI & Data Agreements
Summary
The SEC's authority over your token comes from the investment contract you sold it under, meaning, among other things, the promises and marketing that persuaded people to buy it. Under the SEC and CFTC's March 2026 interpretation, that contract may end once you finish the milestones you promised and say so publicly. As a result, DeFi compliance at a launch now means building to that endpoint and proving you hit it, while tokens you sold before then without an exemption stay exposed.
A token is not a security simply because it is a token. Under the Howey test, an investment contract exists when there is an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others. In a token sale, that analysis looks at the transaction as a whole, including how the token was sold, what purchasers were told, and what work they reasonably expected the issuer to perform.
The SEC’s March 2026 interpretation is the first document the SEC has signed that says when that contract ends. The CFTC signed alongside it, which closed a jurisdictional fight between the two agencies that has run since 2017. It also withdraws the SEC's 2019 staff framework and the 2018 Hinman speech that teams had been relying on, so guidance your counsel cited in 2024 may no longer be operative.
Most teams still run the raise, the build, and the launch as three separate projects. A financing lawyer papers the SAFT or the token warrant, the engineers keep the upgrade keys in a company multisig because shipping is faster that way, and the growth lead keeps promising a roadmap on X.
Separation happens when that contract ends. From there, the question of whether the SEC or CFTC has jurisdiction on a token launch depends in part on how much control you keep over the upgrade keys, the treasury, and the roadmap, and on what your team is telling the market. All the while, everything sold before March 2026 stays judged under the rules that applied when it was sold.
Here’s a breakdown of the main founder takeaways when it comes to launching a token, following the SEC/CFTC interpretation.
The SEC regulates your token until the investment contract behind it ends
Which federal agency regulates your project depends on whether the investment contract is still alive. While it is, your token is a security, so every sale needs a registration statement or an exemption, buyers who bought without one can demand their money back, and US exchanges will not list it. Once it ends, the SEC has no registration claim over the token, while the CFTC may retain authority over fraud and manipulation if the token is a commodity.
A 1946 Supreme Court case about orange groves still decides this. Howey holds that an investment contract exists when people put money into a common enterprise expecting profits from the efforts of others, and the SEC has applied that test to token sales since 2017. Howey attaches to the transaction, so the raise, the marketing, and the promises count.
Courts read the full economic reality of a raise instead of reading the paperwork in isolation. When the SEC sued Kik, the court treated the private SAFT round and the public sale as a single plan, because both used the same marketing and moved the same asset within months of each other.
Separation starts to happen when you complete the milestones you promised and say so publicly. Once fully separated, the token can get listed by an exchange, and sit in a fund without the registration obligations from the original sale following it. That public statement is the separation record.
What CFTC oversight means for digital commodities
The interpretation sorts crypto assets into five named categories, and the category you fit in decides your regulator. Digital commodities, digital collectibles, and digital tools are treated as not being securities in themselves, while digital securities are securities. On the other hand, payment stablecoins issued by permitted payment stablecoin issuers are addressed under the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act (Pub. L. No. 119-27). Most protocol teams are working toward digital commodity treatment, which likely puts their token under the CFTC oversight.
The CFTC's authority over spot crypto trading covers fraud and manipulation and stops there. No registration statement, no periodic reporting, and no reviewer signs off on your token before it trades.
Nobody at the CFTC can tell you in advance that you are in the clear. No filing makes you safe and no letter closes the question, so the agency can bring an enforcement action years from now built entirely out of how you marketed the token at launch. Congress keeps trying to close the gap with market-structure legislation.
Separation and digital commodity treatment are two different questions, and clearing the first does not answer the second. Ending the investment contract removes the SEC's registration claim over the sale. Whether the CFTC has anything to regulate depends on whether your token does something inside a functioning system, and a token that separated cleanly but has no working use can end up with no regulator claiming it and no exchange willing to list it.
Finish what you promised and say so publicly
Before the March 2026 interpretation, projects had no clear standard for when the investment contract behind a token sale had ended. Teams and their counsel had to piece together the answer from a mix of staff speeches, court decisions, and enforcement actions. The new interpretation does not create a safe harbor, but it gives projects a clearer framework for identifying the work purchasers were promised and showing when that work is complete.
That’s why it’s important to identify that work, the milestones that will mark completion, and the resources needed to get there before a token launch. This is particularly relevant to fungible token projects, where common legal issues often boil down to whether the work purchasers were told to expect is actually done. Once those milestones are met, explain publicly what was completed. While this is not a safe harbor, it creates a clear record of what the team promised and whether it delivered.
This also means that who speaks for the company matters as much as what gets built. Every roadmap thread, every conference promise, and every founder reply about price is evidence of what buyers were told to expect, and the interpretation treats marketing and promotional statements as central to whether an investment contract attaches at all. Many teams have a milestone plan and no rule about who is allowed to talk about it.
Separation runs on the promises your company made. A team that never wrote down what it was promising has nothing to point at when it wants to say the promises are complete.
The offshore foundation existed to dodge a question the SEC has now answered
Offshore foundations exist because nobody could say when a company stopped being responsible for a token. Teams moved the tokens and the development budget to a Cayman or Swiss entity so they could argue the company was no longer the one making the network valuable. This is a convoluted workaround that entrenches centralized control while appearing to give it away. With a defined endpoint, the company that did the work can now make that argument in its own name.
Depending on the situation, developer companies could benefit from incorporating as a Delaware public benefit corporation, with a DAO that holds legal standing through a Wyoming DUNA. A public benefit corporation is a for-profit corporation whose board balances stockholder returns against a public benefit named in its charter, and a Wyoming DUNA has since July 2024 given a decentralized association a legal identity separate from its members, the capacity to sue and be sued, and limited liability for participants. Neither structure requires moving tokens offshore or appointing directors the team has never met.
An earlier token sale is still judged by the old rules
Howey applies as of the date of the offer or sale. The SEC measures a 2023 sale to US buyers against what those buyers reasonably expected in 2023.
Antifraud liability survives separation entirely. Securities Act Section 17(a) and Exchange Act Rule 10b-5 reach untrue statements and omissions made in connection with the offer or sale, and the interpretation acknowledges that they can still apply after the token and the investment contract have come apart. A team that overstated its treasury or its user numbers during a raise can be sued for it by the SEC or by its buyers whether or not the token is a security today.
Secondary-market sales can also stay inside securities law where buyers are still relying on the issuer's work, and separation does not settle whether a given resale is a securities transaction.
Final thoughts
Promises your team already made, in a deck, a Discord post, or a roadmap published two years ago, set the endpoint the SEC will hold you to, and no federal court has tested how the SEC will apply it. Teams that know what they promised can work toward finishing it. The ones without that list end up assembling it under time pressure, usually while an exchange or a diligence team is already asking.
If any of this is unresolved going into a launch, the time to get specific is before the token generation event and not after an exchange sends its listing questionnaire. A roadmap with promises nobody has tracked, a pre-2026 sale to US buyers with no exemption on file, or upgrade keys still sitting in a company multisig at launch are each worth a conversation. Reach out and we will give you a clear read on where you stand.
This guide is for general informational purposes and does not constitute legal advice. No attorney-client relationship is formed by reading this material. The March 2026 interpretation is an interpretive release rather than a rule adopted through notice and comment, it does not bind a federal court, and its application to any specific token depends on facts this guide cannot assess.
FAQs
Does our token structure trigger securities law?
A token becomes subject to securities law when it is sold as part of an investment contract, which is a transaction where people put money into a common enterprise expecting profits from the efforts of others. The token itself is rarely the problem. The raise around it pulls the token in, meaning the SAFT, the marketing, the roadmap, and the promises the team made about what it would build. The SEC and CFTC's March 2026 interpretation left that test intact and added an endpoint to it, so a structure that was inside securities law at the raise can come out of it once the promises are complete or publicly abandoned.
What is a token generation event and when should we hold ours?
A token generation event is the moment your token is minted and distributed to holders, and teams usually schedule it against a fundraise or an exchange listing window. The March 2026 interpretation makes the sequence matter more than the date. If you hold the token generation event while buyers still reasonably expect your company's work to make the token valuable, the token launches inside a live investment contract and the SEC has authority over every sale of it. Teams in a defensible position finish the promised work first, publish the separation record, and generate and distribute after that. Moving the event earlier does not settle the securities question, it just means you answer it later and with less control.
Who regulates my token, the SEC or the CFTC?
The SEC has authority over your token for as long as it is part of an investment contract, and the CFTC has authority over crypto assets that are digital commodities. The two questions are separate. Ending the investment contract removes the SEC's registration claim over the sale, and it does not by itself make your token a digital commodity, because that category requires the token to have a function inside a working system. CFTC oversight also comes with no registration statement and no periodic reporting, since its power over spot trading stops at fraud and manipulation.
Should our project use a foundation or a Wyoming DUNA?
A foundation is an offshore nonprofit entity, usually in the Cayman Islands or Switzerland, that holds the tokens and the development budget so the company can argue it is no longer the one making the network valuable. That argument existed because nobody could say when a company stopped being responsible for a token, and the March 2026 interpretation now answers that question directly. a16z's published position is that foundations centralize control, and that the developer company should incorporate as a Delaware public benefit corporation while the DAO takes legal standing through a Wyoming DUNA. The right structure depends on where your holders are and what your treasury does.
Do we still have legal exposure from a token sale we did before the interpretation?
In most cases, yes. The March 2026 interpretation works forward only and does not cure a sale that was an unregistered securities offering when it closed. Howey applies as of the date of the offer or sale, so a 2023 raise is measured against what buyers reasonably expected in 2023, and a decentralized network today does not change that. Antifraud liability also survives separation. Securities Act Section 17(a) and Exchange Act Rule 10b-5 reach untrue statements made during a raise, and the SEC or your buyers can bring those claims after the token has come loose from the investment contract.
Curious to learn more about Serotonin Legal? —
Get in Touch
How to Structure a Token Launch After the SEC/CFTC Interpretation
TGE prep, the Wyoming DUNA, and Why Pre-2026 Sales Still Matter
by
Teddy Ellison
AI & Data Agreements
Summary
The SEC's authority over your token comes from the investment contract you sold it under, meaning, among other things, the promises and marketing that persuaded people to buy it. Under the SEC and CFTC's March 2026 interpretation, that contract may end once you finish the milestones you promised and say so publicly. As a result, DeFi compliance at a launch now means building to that endpoint and proving you hit it, while tokens you sold before then without an exemption stay exposed.
A token is not a security simply because it is a token. Under the Howey test, an investment contract exists when there is an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others. In a token sale, that analysis looks at the transaction as a whole, including how the token was sold, what purchasers were told, and what work they reasonably expected the issuer to perform.
The SEC’s March 2026 interpretation is the first document the SEC has signed that says when that contract ends. The CFTC signed alongside it, which closed a jurisdictional fight between the two agencies that has run since 2017. It also withdraws the SEC's 2019 staff framework and the 2018 Hinman speech that teams had been relying on, so guidance your counsel cited in 2024 may no longer be operative.
Most teams still run the raise, the build, and the launch as three separate projects. A financing lawyer papers the SAFT or the token warrant, the engineers keep the upgrade keys in a company multisig because shipping is faster that way, and the growth lead keeps promising a roadmap on X.
Separation happens when that contract ends. From there, the question of whether the SEC or CFTC has jurisdiction on a token launch depends in part on how much control you keep over the upgrade keys, the treasury, and the roadmap, and on what your team is telling the market. All the while, everything sold before March 2026 stays judged under the rules that applied when it was sold.
Here’s a breakdown of the main founder takeaways when it comes to launching a token, following the SEC/CFTC interpretation.
The SEC regulates your token until the investment contract behind it ends
Which federal agency regulates your project depends on whether the investment contract is still alive. While it is, your token is a security, so every sale needs a registration statement or an exemption, buyers who bought without one can demand their money back, and US exchanges will not list it. Once it ends, the SEC has no registration claim over the token, while the CFTC may retain authority over fraud and manipulation if the token is a commodity.
A 1946 Supreme Court case about orange groves still decides this. Howey holds that an investment contract exists when people put money into a common enterprise expecting profits from the efforts of others, and the SEC has applied that test to token sales since 2017. Howey attaches to the transaction, so the raise, the marketing, and the promises count.
Courts read the full economic reality of a raise instead of reading the paperwork in isolation. When the SEC sued Kik, the court treated the private SAFT round and the public sale as a single plan, because both used the same marketing and moved the same asset within months of each other.
Separation starts to happen when you complete the milestones you promised and say so publicly. Once fully separated, the token can get listed by an exchange, and sit in a fund without the registration obligations from the original sale following it. That public statement is the separation record.
What CFTC oversight means for digital commodities
The interpretation sorts crypto assets into five named categories, and the category you fit in decides your regulator. Digital commodities, digital collectibles, and digital tools are treated as not being securities in themselves, while digital securities are securities. On the other hand, payment stablecoins issued by permitted payment stablecoin issuers are addressed under the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act (Pub. L. No. 119-27). Most protocol teams are working toward digital commodity treatment, which likely puts their token under the CFTC oversight.
The CFTC's authority over spot crypto trading covers fraud and manipulation and stops there. No registration statement, no periodic reporting, and no reviewer signs off on your token before it trades.
Nobody at the CFTC can tell you in advance that you are in the clear. No filing makes you safe and no letter closes the question, so the agency can bring an enforcement action years from now built entirely out of how you marketed the token at launch. Congress keeps trying to close the gap with market-structure legislation.
Separation and digital commodity treatment are two different questions, and clearing the first does not answer the second. Ending the investment contract removes the SEC's registration claim over the sale. Whether the CFTC has anything to regulate depends on whether your token does something inside a functioning system, and a token that separated cleanly but has no working use can end up with no regulator claiming it and no exchange willing to list it.
Finish what you promised and say so publicly
Before the March 2026 interpretation, projects had no clear standard for when the investment contract behind a token sale had ended. Teams and their counsel had to piece together the answer from a mix of staff speeches, court decisions, and enforcement actions. The new interpretation does not create a safe harbor, but it gives projects a clearer framework for identifying the work purchasers were promised and showing when that work is complete.
That’s why it’s important to identify that work, the milestones that will mark completion, and the resources needed to get there before a token launch. This is particularly relevant to fungible token projects, where common legal issues often boil down to whether the work purchasers were told to expect is actually done. Once those milestones are met, explain publicly what was completed. While this is not a safe harbor, it creates a clear record of what the team promised and whether it delivered.
This also means that who speaks for the company matters as much as what gets built. Every roadmap thread, every conference promise, and every founder reply about price is evidence of what buyers were told to expect, and the interpretation treats marketing and promotional statements as central to whether an investment contract attaches at all. Many teams have a milestone plan and no rule about who is allowed to talk about it.
Separation runs on the promises your company made. A team that never wrote down what it was promising has nothing to point at when it wants to say the promises are complete.
The offshore foundation existed to dodge a question the SEC has now answered
Offshore foundations exist because nobody could say when a company stopped being responsible for a token. Teams moved the tokens and the development budget to a Cayman or Swiss entity so they could argue the company was no longer the one making the network valuable. This is a convoluted workaround that entrenches centralized control while appearing to give it away. With a defined endpoint, the company that did the work can now make that argument in its own name.
Depending on the situation, developer companies could benefit from incorporating as a Delaware public benefit corporation, with a DAO that holds legal standing through a Wyoming DUNA. A public benefit corporation is a for-profit corporation whose board balances stockholder returns against a public benefit named in its charter, and a Wyoming DUNA has since July 2024 given a decentralized association a legal identity separate from its members, the capacity to sue and be sued, and limited liability for participants. Neither structure requires moving tokens offshore or appointing directors the team has never met.
An earlier token sale is still judged by the old rules
Howey applies as of the date of the offer or sale. The SEC measures a 2023 sale to US buyers against what those buyers reasonably expected in 2023.
Antifraud liability survives separation entirely. Securities Act Section 17(a) and Exchange Act Rule 10b-5 reach untrue statements and omissions made in connection with the offer or sale, and the interpretation acknowledges that they can still apply after the token and the investment contract have come apart. A team that overstated its treasury or its user numbers during a raise can be sued for it by the SEC or by its buyers whether or not the token is a security today.
Secondary-market sales can also stay inside securities law where buyers are still relying on the issuer's work, and separation does not settle whether a given resale is a securities transaction.
Final thoughts
Promises your team already made, in a deck, a Discord post, or a roadmap published two years ago, set the endpoint the SEC will hold you to, and no federal court has tested how the SEC will apply it. Teams that know what they promised can work toward finishing it. The ones without that list end up assembling it under time pressure, usually while an exchange or a diligence team is already asking.
If any of this is unresolved going into a launch, the time to get specific is before the token generation event and not after an exchange sends its listing questionnaire. A roadmap with promises nobody has tracked, a pre-2026 sale to US buyers with no exemption on file, or upgrade keys still sitting in a company multisig at launch are each worth a conversation. Reach out and we will give you a clear read on where you stand.
This guide is for general informational purposes and does not constitute legal advice. No attorney-client relationship is formed by reading this material. The March 2026 interpretation is an interpretive release rather than a rule adopted through notice and comment, it does not bind a federal court, and its application to any specific token depends on facts this guide cannot assess.
FAQs
Does our token structure trigger securities law?
A token becomes subject to securities law when it is sold as part of an investment contract, which is a transaction where people put money into a common enterprise expecting profits from the efforts of others. The token itself is rarely the problem. The raise around it pulls the token in, meaning the SAFT, the marketing, the roadmap, and the promises the team made about what it would build. The SEC and CFTC's March 2026 interpretation left that test intact and added an endpoint to it, so a structure that was inside securities law at the raise can come out of it once the promises are complete or publicly abandoned.
What is a token generation event and when should we hold ours?
A token generation event is the moment your token is minted and distributed to holders, and teams usually schedule it against a fundraise or an exchange listing window. The March 2026 interpretation makes the sequence matter more than the date. If you hold the token generation event while buyers still reasonably expect your company's work to make the token valuable, the token launches inside a live investment contract and the SEC has authority over every sale of it. Teams in a defensible position finish the promised work first, publish the separation record, and generate and distribute after that. Moving the event earlier does not settle the securities question, it just means you answer it later and with less control.
Who regulates my token, the SEC or the CFTC?
The SEC has authority over your token for as long as it is part of an investment contract, and the CFTC has authority over crypto assets that are digital commodities. The two questions are separate. Ending the investment contract removes the SEC's registration claim over the sale, and it does not by itself make your token a digital commodity, because that category requires the token to have a function inside a working system. CFTC oversight also comes with no registration statement and no periodic reporting, since its power over spot trading stops at fraud and manipulation.
Should our project use a foundation or a Wyoming DUNA?
A foundation is an offshore nonprofit entity, usually in the Cayman Islands or Switzerland, that holds the tokens and the development budget so the company can argue it is no longer the one making the network valuable. That argument existed because nobody could say when a company stopped being responsible for a token, and the March 2026 interpretation now answers that question directly. a16z's published position is that foundations centralize control, and that the developer company should incorporate as a Delaware public benefit corporation while the DAO takes legal standing through a Wyoming DUNA. The right structure depends on where your holders are and what your treasury does.
Do we still have legal exposure from a token sale we did before the interpretation?
In most cases, yes. The March 2026 interpretation works forward only and does not cure a sale that was an unregistered securities offering when it closed. Howey applies as of the date of the offer or sale, so a 2023 raise is measured against what buyers reasonably expected in 2023, and a decentralized network today does not change that. Antifraud liability also survives separation. Securities Act Section 17(a) and Exchange Act Rule 10b-5 reach untrue statements made during a raise, and the SEC or your buyers can bring those claims after the token has come loose from the investment contract.
Curious to learn more about Serotonin Legal?
Get in Touch
