“The Howey test says that something is a security if it is ‘a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.’ Basically, if someone raises money to write a DeFi app or something similar by issuing governance tokens, it’s a security and subject to SEC regulation. The test is clear, has been used for nearly 80 years, and efforts to obfuscate that fact are made in bad faith,” he said.
House Meets on Crypto Regulation
