U.S. SEC Publishes Unofficial Framework For Analyzing Digital Assets As Securities

The U.S. Securities and Exchange Commission (SEC) has published a framework for analyzing whether digital assets are “investment contracts” securities. The framework is said to present the views of its authors and is not officially recognized by the commission. However, it is meant to provide guidance on this topic.

The U.S. Supreme Court's landmark decisions in Howey from the 1940s held that an "investment contract" exists when money is invested in a common enterprise with reasonable expectation of profits to be derived from the efforts of others. The framework explains that the "Howey test" applies to any contract, scheme, or transaction, regardless of whether it has any of the characteristics of typical securities.