SEC Commissioner Hester Peirce has said that the test has limits.
The standard is based on a 1946 Supreme Court ruling.
The Securities and Exchange Commission (SEC) uses the so-called Howey test to decide whether a digital asset should be classed as a security, although SEC Commissioner Hester Peirce has said that the test has limits.
The standard is based on a 1946 Supreme Court ruling that established the conditions under which a financial arrangement is considered an “investment contract” and hence subject to federal securities legislation. Peirce elaborated on the importance of the test for the crypto sector.
Unregistered Securities or Not?
The Howey test was established in a case that included the selling of units in a Florida citrus grove development where investors may split the earnings from the grove’s production.
To be an “investment contract,” the panel defines “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led
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