SEC Crypto Definition Draws Ava Labs Challenge Over Tokenized Tickets and Digital Tools

The U.S. Securities and Exchange Commission’s proposed definition of a “crypto asset” has opened a dispute over how far a ledger-based rule should extend beyond tokens built for blockchain protocols.

Ava Labs argued in a Sept. 15 comment letter that the wording could reach tokenized concert, airline or sports tickets, loyalty or in-game items, and tokens used to access artificial-intelligence services merely because distributed-ledger technology is involved. The company wants the SEC to use the narrower term “protocol token.”

That is Ava Labs’ interpretation and policy recommendation, not an SEC finding that those examples are covered. The agency has not adopted a final definition or ruled on the company’s examples.

What the SEC proposal actually says

Proposed Rule 100 defines a crypto asset as a digital representation of value recorded on a cryptographically secured distributed ledger. In the accompanying explanation, however, the SEC says the definition should include only assets for which ledger technology is a “necessary feature.”

Those two elements create the central perimeter question. Recording value on a secured distributed ledger describes a potentially broad technical category. The “necessary feature” language points toward a limit, but the proposal does not yet show how that limit would be applied to every ticket, loyalty point, game item or service-access token.

The proposal also defines a “covered investment contract” through three conditions: a crypto asset must be subject to the contract; the crypto asset must not itself be a security; and no other asset, whether a security or not, may be subject to the same investment contract. Those conditions narrow which investment contracts would qualify for the proposed framework. They do not replace or narrow the separate Rule 100 definition of a crypto asset.

The SEC issued the proposal on Aug. 18, 2026, and it appeared in the Federal Register on Aug. 21. The SEC’s rule page lists File S7-2026-27, RIN 3235-AN38 and an Oct. 20, 2026 comment deadline. It remains a proposal, so it creates no operative definition and may be revised or withdrawn. CRYPTO MAIN NEWS separately examined the proposal’s fundraising paths and their limits.

Why Ava Labs says the boundary is too broad

Ava Labs’ objection is not simply that the SEC mentioned distributed ledgers. Its letter argues that the proposed definition lacks a sufficiently precise limiting principle and could therefore pull ordinary functional items into the crypto-asset category when a developer chooses distributed-ledger infrastructure.

That argument matters because the examples carry uses that can be understood without assuming an investment purpose: admission to an event or flight, participation in a loyalty program or game, or access to a digital service. But the comment letter does not establish how the SEC would classify any particular product. A label such as “ticket” or “point” would not, by itself, resolve the features of a specific asset or transaction.

The public docket also does not show that the SEC has accepted Ava Labs’ position. When checked Sept. 22 at 11:01 a.m. KST, it displayed later submissions dated Sept. 16 and Sept. 18. The newest visible filing, from Dana Love on Sept. 18, addressed retail access, offering-stage investment limits and intermediary conditions rather than directly answering the definition challenge. Filing order is not agency endorsement, and the docket’s displayed badge should not be treated as a reliable total comment count.

The agencies already distinguish functional digital assets

A March SEC and Commodity Futures Trading Commission interpretation complicates the broadest reading of Ava Labs’ concern. It groups crypto assets by characteristics, uses and functions, including digital commodities, digital collectibles, digital tools, stablecoins and digital securities.

The interpretation identifies tickets, credentials, membership instruments and identity badges as examples of practical digital tools, and says digital tools as described are not themselves securities. It also distinguishes an asset from the circumstances of its offer or sale: a non-security asset can still be offered or sold subject to an investment contract.

That functional taxonomy is evidence against assuming that every ledger entry will receive identical securities-law treatment. It does not, however, settle the later Rule 100 question. The March document is not a final interpretation of the August proposal, and the proposal’s crypto-asset definition and its separate investment-contract conditions perform different jobs.

What remains undecided

The immediate issue is not whether tokenized tickets or loyalty points have been declared securities. They have not been so classified by this proposal. The issue is whether the final rule, if there is one, will make “necessary feature” concrete enough to separate protocol-dependent assets from products that merely use a distributed ledger as one implementation choice.

The next meaningful evidence would be an SEC response or a material docket filing that directly addresses the definition, revised rule text, a final rule or withdrawal, a changed comment deadline, or official guidance applying the “necessary feature” language. Until then, Ava Labs’ examples illustrate a disputed perimeter rather than an agency decision.