The US Securities and Exchange Commission (SEC) on Tuesday issued an interpretation clarifying which types of cryptocurrencies are considered securities and how a “non-security” digital asset could meet certain conditions to become an investment contract.

The SEC’s new interpretation – which the US Commodity Futures Trading Commission also joined – classifies crypto tokens into five categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities, with the agency specifying that federal securities laws only apply to digital securities.

The SEC also said that a “non-security” crypto asset could become subject to securities laws if an issuer offers it by promoting investment in a common…