SEC Staff Publish New Crypto Guidelines to Supplement the Howey Test

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Bill Hinman and Valerie Szcezepanik from the United States Securities and Exchange Commission (SEC) FinHub have released a new document on April 3 containing additional guidelines for distinguishing if ICO’s are in fact “Investment Contracts”. The guidelines, which both SEC Commissioners have confirmed merely represents “Staff views” and is “not binding on the Divisions or the Commission”, have been created to supplement the SEC’s existing criteria for determining whether an offered Digital Asset is a security or not. The Howey case is currently the only test that the SEC has in its arsenal to establish whether digital assets sold in ICOs are traded securities under US securities law. The Howey test is comprised of 3 separate components: Has there been an investment of money? Was the money invested in a common enterprise? Was there an expectation to receive profits based solely on the performance of others? If these 3 components…

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