Howey Test
The Howey Test is the US Supreme Court's four-part test for "is this an investment contract (a security)?": money invested, in a common enterprise, with pr
The Howey Test is the US Supreme Court’s four-part test for “is this an investment contract (a security)?”: money invested, in a common enterprise, with profit expectations, derived from others’ efforts. Fail any prong and it’s (probably) not a security; meet all four and the SEC claims jurisdiction.
Why it matters
Nearly every token sale trips at least three prongs, which is why US exchanges delist aggressively and projects geoblock Americans — regulatory risk shapes which assets you can even access. You don’t need a law degree, just the reflex: centralized team + promised profits + your money = expect regulators eventually, and price that risk.