February 7, 2022
Cryptocurrencies are currencies, not securities, and should not be regulated as securities.
The Howey Test, based on the 1946 U.S. Supreme Court caseSEC v. W.J. Howey Co. provided 3 questions to determine if an asset is a security.
1. Is there an investment of money with the expectation of future profits?
No more than someone would invest in the dollar with an expectation of it rising or falling in value.
2. Is there investment of money in a common enterprise?
There is no 'common enterprise' as it is a currency, and not based on work or efforts of a some third party producing a product or service.
3. Do any profits come from the efforts of a promoter or third party?
No. No profits come from the products, services, or work of any third party.
Cryptocurrencies fail the Howey test and, therefore, are not securities, and should not be regulated as securities.