At a time when the SEC has been a bogeyman for many cryptocurrency startups, it was striking to see a room full of crypto people applaud SEC Chairman Jay Clayton.

The applause came after Clayton answered a question during a fireside chat at CoinDesk’s Consensus: Invest about whether digital assets function as currencies or securities.

“An asset like bitcoin, where it’s designed to be a payment system replacement for sovereign currencies, we’ve determined that doesn’t have the attributes of a security,” Clayton answered. “I’ll leave commodities to the CFTC. But as far as I’m concerned, it’s designed to be akin to the dollar, the yen, the euro. And it operates that way. People who purchase it are expecting it to operate that way. And it’s not centrally created or distributed.”

This is not the first time the SEC has indicated that it does not view bitcoin as a security. Clayton said it during a House Appropriations Committee hearing back in April. Then in June, at Yahoo Finance’s All Markets Summit: Crypto, SEC director of corporate finance William Hinman reiterated this view on bitcoin and added that the SEC does not view ether as a security, either.

But on this occasion, Clayton spoke more candidly, and said a bit more on the subject, than he has in the past.

SEC chair compares bitcoin to fiat currencies

To understand why crypto people are so pleased to hear Clayton say bitcoin is not a security, look no further than the obvious crackdown the SEC has exercised on companies that conducted ICOs (initial coin offerings) or “token sales” under the view that these sales were unregistered securities offerings. Big bitcoin believers would generally prefer less SEC regulation of the space, not more, and if the SEC does not view bitcoin as a security, then it is not under its purview.

There was also something strange in what Clayton said about bitcoin: the suggestion that he still views bitcoin as behaving like a currency. Clayton called it “akin to the dollar, the yen, the euro,” and added that bitcoin, “operates that way.”

But it doesn’t, really.

The early vision of bitcoin as a currency, and specifically a legitimate alternative to fiat currency, has not played out.

Rather, many see bitcoin as a store of value (“digital gold”); many see it as having a killer use case in emerging markets where people are underbanked or unbanked and need an easier way to get paid; and many institutions see potential in blockchain, the distributed ledger technology that underlies bitcoin. But the places where you can actually spend bitcoin are still few and far between.

If you do a token sale, ‘start with the assumption’ it’s a securities offering

Clayton also provided additional clarity on the SEC’s view about ICOs.

He began with a bit of Securities 101 as backround: “What is the definition of a security? It’s when I as the investor give you my money with an expectation of a return based on your efforts and the efforts of your affiliates,” Clayton said.

That sounds a lot like what happens in an ICO, when crypto companies create and sell a new token to investors who hope the value of the token will rise once the new enterprise launches.

Clayton even tried out a new analogy, on the fly, that he said he came up with after passing Broadway to get to the conference. “Let’s say you’re the producer of a new play,” Clayton said. “And you get 15 people to invest in that play and you say, ‘Your interest in this play is going to be a suite of tickets.’ You’re giving them tickets in exchange for their interest in the play—those tickets are securities. They’re taking those tickets back, waiting for the profits. It’s like taking 10% of the play.”

In case all of the analogies didn’t make it clear enough, Clayton finally said in plain English: “If what you’re doing is starting a venture, and you’re funding that venture by issuing tokens, you should start with the assumption that you are conducting a securities offering.”

Of course, the SEC had already been making this view abundantly clear, first behind the curtain and then, more recently, out in the open. As a Yahoo Finance investigation uncovered in October, the SEC has been aggressively issuing subpoenas and taking action against companies that conducted unregistered ICOs all year.

Then, last week, the SEC put out a press release touting settlements with two ICOs in particular, Airfox and Paragon, that will now each have to pay a $250,00 fine to the SEC and refund buyers of their tokens who ask for a refund.

Clayton commented specifically on the settlements with Airfox and Paragon: “I don’t think there’s any doubt that these were securities being sold, they were being sold in a way that was not consistent with the private-placement exemptions, and they were not registered with us. And when that happens, we have the right to bring actions, which we did, and investors have remedies. One of those remedies is the obligation of the offeror to buy back the securities at the price they were sold… Look, people should understand that this was the remedy in this particular case, but remedies in future cases may be different. You know, get your act together.”

Clearly, the SEC is taking obvious pains to make its regulatory approach clear: bitcoin is not a security; ether is not a security; newly created tokens are securities, and sales of newly created tokens must be registered as securities offerings with the SEC unless they meet an SEC exemption.

As for whether XRP (or “ripple”) is a security, Clayton declined to answer.

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Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.

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