Is “The Howey Test” Outdated? Modernizing Rules For The Digital Age

The depart and attain of cryptocurrency adoption in fresh years indicators the dire want for up-to-the-minute rules that concurrently safeguards merchants and permits innovation to flourish. Because it stands, most crypto tokens tumble internal a regulatory gray salvage 22 situation as they don’t match for the length of the confines of the feeble financial machine — so why would per chance well nonetheless they tumble prey to inapplicable, outdated principles?

Currently, the SEC applies “The Howey Test,” prognosis based mostly solely mostly on a 1946 U.S. Supreme Court ruling, to roar apart between securities and non-securities. The SEC asserts that securities are an “investment of cash in a frequent project with an cheap expectation of profits to be derived from the efforts of others.”