What Is the “Howey Test” and Its Relevance to Crypto Tokens?

The Howey Test is a US Supreme Court standard used to determine whether a transaction qualifies as an "investment contract" and thus a security subject to regulation. It involves four criteria: an investment of money, in a common enterprise, with an expectation of profit, derived solely from the efforts of others.

If a crypto token meets this test, it is considered a security and must comply with securities laws.