How does the SEC define securities in the context of digital currencies?

3 answers

• mrll3Jan 17, 2023 · 3 years ago
  According to the SEC, securities in the context of digital currencies are defined as any investment contracts or instruments that involve the investment of money in a common enterprise with the expectation of profits solely from the efforts of others. This means that if a digital currency is offered as an investment opportunity and the investors expect to make profits solely based on the efforts of the issuer or a third party, it may be considered a security by the SEC. It's important to note that the SEC evaluates each digital currency on a case-by-case basis to determine if it meets the definition of a security.
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• Kreshanth KolaJun 22, 2023 · 3 years ago
  The SEC defines securities in the context of digital currencies by looking at whether the investment involves the expectation of profits from the efforts of others. If the investors are relying on the efforts of the issuer or a third party to generate profits, the digital currency may be considered a security. However, if the investors have control over the success of the investment and can actively contribute to its profits, it may not be classified as a security. The SEC's definition aims to protect investors from fraudulent or misleading investment schemes in the digital currency space.
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• Thom EversOct 31, 2025 · 4 months ago
  As an expert in the field, I can tell you that the SEC defines securities in the context of digital currencies based on the Howey Test. This test was established by the Supreme Court in 1946 and is used to determine whether an investment contract qualifies as a security. According to the Howey Test, a digital currency is considered a security if it involves an investment of money in a common enterprise with the expectation of profits solely from the efforts of others. This definition helps the SEC regulate digital currency offerings and protect investors from potential scams or fraudulent activities.
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