House Meets on Crypto Regulation

“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.