For more than a decade, American investors and innovators have operated under a cloud of uncertainty about when crypto assets implicate the federal securities laws. Markets function best when everybody understands the rules. Yet, for too long, financial regulators have responded to good-faith regulatory inquiries with silence, raised barriers to entry, and ad-hoc enforcement actions that only deepened the industry’s confusion.

The Securities and Exchange Commission is taking an important step to reverse that prior approach.

The Commission has released a landmark interpretation that finally provides clear guidelines. We establish a straightforward taxonomy of crypto assets — most of which are not securities — and clarify how the…