The Stellar Development Foundation and five other blockchain organizations jointly asked the U.S. Securities and Exchange Commission (SEC) to write the digital commodity definition directly into the text of its proposed federal crypto regulations, according to a joint filing reported by Diana (@InvestWithD).

The filing seeks to separate a crypto asset's status from the investment contracts used to sell it, preserving distinct legal tests for each. The SEC has yet to adopt the requested wording, leaving the coalition's proposed changes subject to the rulemaking process.

Stellar Joins Five Blockchain Groups in SEC Filing

The Stellar Development Foundation has asked the SEC to clarify digital commodity rules, with support from Hedera, Aptos Labs, Ava Labs, the Cardano Foundation, and Chainlink Labs. Their letter responds to the SEC's proposed Regulation Crypto Assets framework.

The submission is addressed to SEC Secretary Vanessa A. Countryman. It urges the commission to make the digital commodity definition part of the regulatory text itself, arguing that market participants should have unambiguous language they can refer to directly within the rules. A definition embedded in an adopted rule would form part of the binding regulatory text, whereas designations announced outside formal rulemaking do not by themselves change what the rules say.

The letter describes Layer 1 networks as “applications, transactions, staking, mining, governance infrastructure” — systems that are developed and maintained by network participants. The signatories ask for rules that account for how these networks actually operate.

The filing does not announce a new SEC decision on Stellar or XLM. Instead, it requests changes to a proposed regulatory framework, and the commission must consider the comments before finalizing the relevant provisions.

Filing Separates Token Status From Investment Contracts

The filing draws particular attention to Question 131 and proposed Rule 400, where a highlighted passage concerns digital commodities sold through investment contracts. The groups want the rules to distinguish the asset itself from the transaction used to sell it.

In U.S. securities law, an investment contract is one of the statutory categories of security — a term the Supreme Court outlined in its 1946 Howey decision, describing an arrangement in which a person invests money in a common enterprise and reasonably expects profits derived from the efforts of others. How the underlying asset is treated separately from the contract used to sell it has been among the most debated questions in U.S. digital asset regulation, which is why the signatories want the distinction stated in the rule text rather than left implicit.

Under this approach, a crypto asset would not automatically become a security simply because it appears in an investment contract. However, the particular offering or transaction could still fall under securities laws. The letter asks the SEC to state this distinction directly in the regulation.

According to Diana's post, the SEC named XLM, XRP, LINK, HBAR, and other assets as digital commodities in March. The filing seeks to carry that treatment into the actual rule text, though it does not mean every transaction involving these tokens falls outside securities regulation.

The submission also addresses secondary-market transactions and the proposed safe harbor, questioning whether the draft adequately explains the safe harbor's voluntary nature. These requests concern how the rules would work in practice, beyond the definition itself.

SEC Rulemaking Will Decide Whether Wording Changes

For XLM, the request concerns how regulators describe the token under the proposed framework. It does not settle every legal question involving Stellar-related transactions, and the circumstances of a particular offering may still determine which laws apply.

The filing brings together organizations from six blockchain ecosystems — Stellar, Hedera, Aptos, Avalanche, Cardano, and Chainlink — each with distinct networks and applications. They share concerns in the joint letter regarding token classification and token sales.

The requested language could provide developers and market participants with a clearer reference point. A submitted comment, however, does not guarantee SEC adoption or binding effect, and the proposed wording remains subject to change or removal in the final regulation.

No XLM price information, trading volume, or technical indicators are included in the filing materials, and the documented development is a regulatory change rather than a shift in trading conditions.

The next step rests with the SEC as it weighs the proposed rules and public feedback. Under the federal notice-and-comment process, the commission reviews submissions from all parties before adopting a final rule, and final provisions can differ from the proposed text. If the commission adopts the requested language, the final text would clarify the distinction sought by the signatories. For now, the filing stands as a request rather than a final rule of the federal regulations.