What is the Howey Test and how does it relate to the SEC and cryptocurrency?

1 answers

• Jan 13, 2022 · 3 years ago
  The Howey Test is a legal standard used by the SEC to determine whether a particular investment, including cryptocurrencies, qualifies as a security. It was established in 1946 in a Supreme Court case called SEC v. Howey Co. The test consists of four elements: 1) an investment of money, 2) in a common enterprise, 3) with an expectation of profits, 4) solely from the efforts of others. If a cryptocurrency meets these criteria, it is likely to be considered a security by the SEC. This means that the cryptocurrency would be subject to the regulations and oversight of the SEC, which can impact its operations and compliance requirements. It is important for cryptocurrency projects to understand the Howey Test to ensure they are in compliance with securities laws and regulations.
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