Howey test

The Howey test is a legal standard from a 1946 United States Supreme Court case used to decide whether an arrangement qualifies as an "investment contract," and therefore a security, under US law. It broadly asks whether there is an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. Regulators have applied this framework when assessing whether certain crypto assets are securities.

A common misconception is that it gives a simple yes-or-no answer for all tokens; application is fact-specific and contested. This entry is educational and not legal advice.