What Is the Howey Test and How Does It Apply to ICOs?
The Howey Test is a legal test used by the U.S. Supreme Court to determine whether a transaction qualifies as an "investment contract" and is therefore subject to securities laws. It has four prongs: an investment of money, in a common enterprise, with an expectation of profits, primarily from the efforts of others.
The SEC applies this test to ICOs to determine if a token is a security.
Glossar
The Howey Test
Framework ⎊ The Howey Test, originating from the 1946 SEC v.
Howey Test
Test ⎊ The Howey Test is the seminal legal methodology, derived from a 1946 Supreme Court case, used to ascertain if a transaction involves an "investment contract," thereby classifying the underlying asset as a security.
Icos
Issuance ⎊ Initial Coin Offerings (ICOs) represent a method for projects to issue new digital tokens to raise capital from early investors.