Under What Criteria Does the SEC Classify a Crypto Asset as a “Security”?

The SEC primarily uses the Howey Test , a legal precedent from a 1946 Supreme Court case, to determine if an asset is an "investment contract" and thus a security. The test asks: 1) Is there an investment of money?

2) Is the investment in a common enterprise? 3) Is there an expectation of profit?

4) Does the expectation of profit derive solely from the efforts of others (a third party)? If all four criteria are met, the crypto asset is likely classified as a security and falls under SEC jurisdiction.