Is “The Howey Test” outdated? Modernizing regulations for the digital age

Is “The Howey Test” outdated? Modernizing regulations for the digital age


The rate and reach of cryptocurrency adoption in recent years signals the dire need for modern regulations that simultaneously safeguards investors and enables innovation to flourish. As it stands, most crypto tokens fall within a regulatory gray area as they don’t fit within the confines of the traditional financial system — so why should they fall prey to inapplicable, outdated rules?

Presently, the SEC applies “The Howey Test,” a legal analysis based on a 1946 U.S. Supreme Court ruling, to differentiate between securities and non-securities. The SEC asserts that securities are an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”

However, there is a glaring void of regulatory clarity on who determines this

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