DeFi Debrief: Week of March 20, 2026
March 21, 2026
SEC & CFTC on Federal Securities Laws; Update in Beba Lawsuit; Update on Innovation Exemption; Phantom No-Action Letter; DEF Updates
SEC and CFTC Clarify How Federal Securities Laws Apply to Crypto Assets
On March 17, 2026, the Securities and Exchange Commission (SEC) issued an “interpretation clarifying how federal securities laws apply to certain crypto assets and related transactions.” The Commodity Futures Trading Commission (CFTC) joined the SEC, outlining how the CFTC and its staff will administer the Commodity Exchange Act consistent with the guidance. Chair Atkins’ speech on the same day the interpretation was released also previews what is to come in an SEC innovation exemption: a fit-for-purpose “startup exemption,” a “fundraising exemption,” and an “investment contract safe harbor” from the definition of “security” for certain crypto assets.
The interpretation (1) provides a token taxonomy, (2) addresses how a non-security crypto asset may become subject to (or may cease to be subject to) an investment contract, and (3) clarifies the application of the federal securities laws to protocol mining, protocol staking, the wrapping of a non-security crypto asset, and airdrops. Notably, the interpretation clarifies that “certain crypto asset disseminations known as ‘airdrops’ do not involve an ‘investment of money’ under the Howey test.” It also describes four “asset categories that are not deemed securities: digital commodities, digital collectibles, digital tools, and payment stablecoins under the GENIUS Act.”
You can read the fact sheet here and view the full interpretive release here.
DEF and Beba Drop SEC Airdrop Challenge
On March 16, 2026, DEF and Texas-based apparel company Beba LLC voluntarily dismissed our lawsuit challenging the SEC’s treatment of free airdrops under former SEC Chair Gary Gensler without prejudice, allowing the suit to be refiled in the future. Originally filed in 2024, the case argued that the SEC had effectively treated free airdrops as securities transactions through enforcement actions rather than formal rulemaking with public notice and comment, violating the Administrative Procedures Act.
In deciding to drop the case, DEF and Beba cited the recent shifts in the SEC’s approach, including statements from Commissioner Peirce and the work of the Crypto Task Force. The SEC’s March 17 interpretation explicitly clarified that token airdrops are not considered securities transactions, providing greater regulatory clarity for the industry.
SEC Commissioner Peirce Provides Update on Innovation Exemption
On March 12, 2026, SEC Commissioner Hester Peirce provided an update on the agency’s “innovation exemption” during remarks at the SEC’s Investor Advisory Committee (IAC) meeting. In her speech, Commissioner Peirce explained that SEC staff are evaluating a potential exemption that would facilitate limited trading of tokenized securities and allow firms to experiment with blockchain technology while regulators assess how existing securities laws might apply.
Commissioner Peirce’s remarks reinforce SEC Chairman Paul Atkins’s previous statements, emphasizing that the exemption is intended to create a controlled environment where companies can test tokenized securities and new trading infrastructure while the SEC gathers information to develop a long-term regulatory framework.
A link to the full speech transcript is available here.
To learn more about innovation exemptions and safe harbors, explore DEF’s blog posts:
- Chair Atkins’ Proposed DeFi Innovation Exemption
- Decoding the SEC’s New Rulemaking Agenda: Potential DeFi Impacts
- SEC and CFTC Host Crypto Regulatory Harmonization Roundtable
- SEC Speech Discusses Potential Innovation Exemption for DeFi
CFTC Staff Issues Phantom a No-Action Letter
On March 17, 2026, the CFTC’s Market Participants Division issued a no-action letter to Phantom Technologies Inc. (Phantom), a self-custodial digital assets software provider, stating that staff will not recommend enforcement action against Phantom for failing to register as an introducing broker. The relief is limited to Phantom’s non-custodial interface that connects users to CFTC-regulated derivatives and does not constitute a formal agency ruling. As a no-action position that applies only to Phantom, other market participants would need to seek similar relief individually rather than rely on it as broadly applicable guidance. This is an important step forward by the CFTC and a positive signal of what is to come.
As DEF explained in a previous blog, no-action letters can serve as a critical bridge, offering builders a degree of legal certainty pending comprehensive regulatory frameworks. For detailed analysis on what no-action letters are and why they are important, please see our blog here.
Notably, on March 20, 2026, Ayana Dow, DEF’s senior counsel, joined Blockstories to discuss why the no-action letter matters, saying “what makes this significant is that the CFTC is implicitly acknowledging that a software provider in a similar situation can offer access to CFTC-regulated derivatives trading without being treated as a regulated intermediary.”
Related Media:
- Blockstories: CoinShares Expands Into Onchain Asset Management, Brings Multi-Asset Portfolios Onchain (March 20, 2026)
DEF Co-Signs Open Letter to U.S. Universities on DeFi Education
On March 18, 2026, DEF joined 1inch and industry partners in urging U.S. higher education institutions to further integrate digital assets, blockchain, and DeFi into business and legal curriculum.
You can read the letter here.
Related Media:
DEF’s Executive Director Speaks at DC Blockchain Summit
On March 17, 2026, DEF’s Executive Director & Chief Legal Officer Amanda Tuminelli moderated a conversation about how to regulate DeFi without killing innovation, featuring Stani Kulechov, Rep. Warren Davidson (R-OH), and Evan Sui.
During the panel discussion, the speakers explored DeFi as an alternative to traditional finance, highlighted ongoing challenges within the space, and emphasized the need for these issues to be addressed through the market structure bill.
DEF Holds House Briefing on Promoting Innovation in Blockchain Development Act
On March 18, 2026, DEF held a congressional staff briefing on the Promoting Innovation in Blockchain Development Act (PIBDA) of 2026 for staff whose members serve on the House Judiciary and Financial Services Committees. Michael Mosier, former Acting Director of FinCEN, joined DEF’s Amanda Tuminelli for the discussion.
During the briefing, the speakers broke down PIBDA, explaining its significance and how it aims to address the misapplication of Section 1960 to software developers.
Read the DEF one-pager for this bipartisan bill here, and you can find a detailed analysis here on what PIBDA does and why it matters for software developers.
DeFi Dictionary
In crypto, security isn’t optional. Our Word of the Week helps you stay protected:
Notable and Quotable
“For most of history, if two people wanted to transact, they could simply do so. Today, the financial system assumes an intermediary has to approve it. DeFi flips that back around—it allows people to transact directly, securely, and transparently without asking permission.”
—Representative Warren Davidson at DC Blockchain Summit
