8 ms·

It’s not the SEC’s definition, it’s the supreme court’s: If: - It is an investment of money - There is an expectation of profits from the investment - T

by brasic 4y ago

It’s not the SEC’s definition, it’s the supreme court’s: If: - It is an investment of money - There is an expectation of profits from the investment - The investment of money is in a common enterprise - Any profit comes from the efforts of a promoter or third party Then it’s a security. https://en.m.wikipedia.org/wiki/SEC_v._W._J._Howey_Co https://en.m.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.

petesergeant 4y ago
Not disputing this, but does that mean buying forex is a security, and if not, what stops it being? My guess is that foreign governments aren’t counted as 3rd parties / promoters?
- fnordpiglet 4y ago
  Forex is not a security because it’s not an investment in an enterprise but an exchange of like for like of legal tender. Otherwise the money changers at airports would be regulated by the SEC and they would have to register their currency exchange, and any international transaction would have to be disclosed and regulated by the sec in literally every single case. Plus the SEC has no authority either of the treasury of the US nor any other governments treasury.
  - cdiddy2 4y ago
    so having another country declare a crypto as legal tender makes it no longer a security in the US?
    - klodolph 4y ago
      Feels like the answer to these questions is just gonna be “maybe such a case in the future will make it to the courts, and the courts will have to come up with an interpretation here.” We can make guesses about what the courts will decide but how confident are we in our guesses?
      - cdiddy2 4y ago
        its already the case with el salvador and bitcoin. bitcoin wasn't really under question though for being a security so would need someone to make a smaller token legal tender
    - lxgr 4y ago
      A currency being legal tender presumably has little bearing on whether the U.S. would consider it a currency. Some countries don‘t even have the concept of legal tender, while others recognize currencies they don’t issue themselves. Being issued by a sovereign state would probably be a better test.
      - kyboren 4y ago
        > Being issued by a sovereign state would probably be a better test. Aha, so they just need another layer of indirection. Acting on the imprimatur of the country's central bank, programmatically issue a sovereign CBDC upon the deposit of BTC. Keep cryptographic proof of 100% BTC reserves at all times to provide ultimate credibility for your (potentially parallel) currency (so you can keep using dollars or pesos or whatever in your real economy). Allow intra-CBDC transfers for 0.1% fee and programmatic redemptions for BTC for 0.2%. Profit. `ping -i1 www.bcr.gob.sv`...
      - Xorakios 4y ago
        The economic definition of "legal tender" is sometimes obscured in casual conversation. It isn't "issued by a sovereign state" - that's "fiat" but rather "used for paying taxes." And sometimes, like in the US, debts ("all debts foreign and domestic"). Certainly it has to vary among countries of which I am ignorant, but generally in the Anglosphere it is debts, not payments, that trigger the definition of "legal tender."
    - fsckboy 4y ago
      an argument like that couldn't hurt, but if North Korea declared Apple stock to be legal tender, it wouldn't make Apple stock not a security.
- dragonwriter 4y ago
  > Not disputing this, but does that mean buying forex is a security, and if not, what stops it being?. I’m not sure the rationale (or if it is just an explicit designation), but forex (and some related derivatives) is commodity trading regulated by the CFTC rather than security trading regulated by the SEC. (I think a regulatory problem with cryptocurrency is that it is generally clearly one or the other, but not always clear which, and while the market would like crypto to be one category it is probably a messy split between the two, absent legislation defining it and assigning it as a category.)
  - TylerE 4y ago
    Seems like a fairly clear line can be drawn unambiguously. If it’s, like Bitcoin, just a number in a ledger, it’s a commodity. As soon as you attach any specific data to it, like a smart contract or tieing it to a single, tangible object like a painting, or paying rewards to people who bought before a specified time, it’s no longer fungible. It isn’t a commodity.
    - pa7x1 4y ago
      Confidently wrong. Par for the course in HN.
      - TylerE 4y ago
        Such a detailed rebuttal.
        pa7x1 4y ago
        There is nothing to rebut. Your argument has nothing to do with Security's laws or the legal jurisprudence around it. It can be substituted by "if it starts with B like Bitcoin, it's not a Security" which contains exactly the same amount of argumentative power. It takes significantly more time to construct a rebuttal than to produce a gish gallop of senseless arguments like the one above. So I will simply refer you to this link: https://isethereumasecurity.com/ https://isethereumasecurity.com/
- michael_vo 4y ago
  If you just exchange usd for euro that’s not an expectation of profit per se. And no one is taxed for this action. If you’re a day trader of forex usually at the end of the day you would settle back into your default currency. Your gains from this is taxed. But usually when doing this you’re buying derivative products that are explicitly securities with maturity dates.
  - lrvick 4y ago
    If you are buying euros as a hedge against USD inflation then you are expecting a potential of profit, or at least lowering losses. Same with precious metals, or Bitcoin.
    - deleted 4y ago
      [deleted]
    - michael_vo 4y ago
      I agree if it’s part of your investment portfolio. The profit part comes when you cash it back into your default currency in order to use it or to realize the gains. If you bought btc, used it to buy goods, and never cashed it back to usd then I think it is a currency.
      - charcircuit 4y ago
        You realize gains when you use another currency to buy something. So if you exchange USD for Euro and then the price of Euro goes up by 5% then when you buy a sandwhich with that money you have to pay taxes on 5% of the price of that sandwhich. Unless you convert your USD to Euro at the time of the transaction buying things with euro can turn into a tax nightmare since you have to keep track of the exact time you purchase something to know the exact exchange rate. If this wasn't the case you could just avoid capital gains by buying something with eulos and reselling it for usd with no profit.
        Xorakios 4y ago
        In the US the taxable event generally occurs when one currency is converted back to USD, not when a non-USD currency is spent. Real-time conversions do occur and you are absolutely correct it can turn into a tax nightmare when traveling :(
- darksaints 4y ago
  There is a broad array of explicit exemptions from the Securities Act of 1932. Municipal bonds, for example, are not regulated by the SEC because they are explicitly exempted. Interest bearing bank acceptances or commercial paper with maturities less than 180 days or 270 days respectively are also explicitly exempt. Since coinbase’s offering has no maturity date, and money can be withdrawn at will, my guess is that they are trying to argue that this is an exempt security. TBF, I don’t see much difference between this and a foreign-denominated interest bearing bank account. There’s a lot of crypto==bad posting going on, and I generally agree with the crypto==bad crowd, but this is hardly a clear matter and likely needs to be taken to court to resolve. The SEC has a long history of turf wars with other regulatory agencies and regulatory overreach beyond their congressional authorization. They have lost 4 out of their last 5 Supreme Court cases related to cryptocurrency. I wouldn’t be surprised if their refusal to clarify is because they know they wouldn’t prevail in court and are trying to get away with setting precedent in the court of public opinion. It certainly looks like it’s working, judging by the opinions in this thread.
  - pa7x1 4y ago
    Current SEC's position seems to be mostly political posturing by Gary Gensler, and not necessarily based on technical or regulatory merits. There is strong dissent within the SEC with its most recent actions. Most notably by Hester Peirce, one of the 5 SEC commissioners. Something smells afoul at the top of the SEC. You can watch a very interesting recent interview with her here: https://www.youtube.com/watch?v=kvsJM0regpw https://www.youtube.com/watch?v=kvsJM0regpw Or read some of her recent dissents: https://www.sec.gov/news/statement/peirce-statement-kraken-020923 https://www.sec.gov/news/statement/peirce-statement-kraken-0...
yawnr 4y ago
So — housing?
- agency 4y ago
  - Any profit comes from the efforts of a promoter or third party
  - autoexec 4y ago
    Couldn't that apply to just about anything the moment anyone anywhere says "Buying X is a good investment!" so long as it's possible that the promotion resulted in X selling at a higher price?
  - yawnr 4y ago
    A broker?
- ghouse 4y ago
  If a Real Estate Investment Truest (REIT), then yes.
- rafram 4y ago
  Housing isn’t an investment in a common enterprise.
  - simple-thoughts 4y ago
    False. If your local governing agency (whether private or public) fails to maintain the local parks, schools, and roads, the value of your house will fall. Houses are securities according to the Howey test.
    - Godel_unicode 4y ago
      No they aren’t. “The respondent companies are offering something more than fee simple interests in land…they are offering an opportunity to contribute money and to share in the profits of a large citrus fruit enterprise.” https://recaldelaw.com/do-security-regulations-cover-real-estate-investments/ https://recaldelaw.com/do-security-regulations-cover-real-es...
joefigura 4y ago
Coinbase claims that none of the crypto assets it lists meet that test. For the coins Coinbase lists: - Criteria #2 is debatable - They don't meet criteria #3 - Or they don't meet criteria #4 Lots of coins look like commodities. They represent a digital asset, not ownership in a common enterprise or a loan. CFTC officials have said as much, as Coinbase quoted: "the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil…or crypto assets." - Then-CFTC Commissioner Quintenz Coinbase believes that all of the tokens they list are securities. The SEC needs to tell Coinbase specifically what it believes they are doing wrong - it will have to eventually, if it files suit. It feels like a lot of people have knee-jerk crypto=bad reactions. But read their press release - it really sounds like Coinbase is trying their best to comply with U.S. regulation, and the regulators aren't doing their jobs. And last - For digital assets that do look like securities, the SEC provides no way to register them, and thus vaguely implies that Americans can't own digital securities. That's not their decision to make - they either have to do their job and regulate crypto securities, or get congress to ban them. Edit: arcticbull pointed out that many digital assets do seem like securities (ICOs). Updated this comment with Coinbase's claim that they don't list any tokens that resemble securities
- arcticbull 4y ago
  Sure they do. Explanation here. [1] > Crypto folks: We want regulatory clarity. > SEC: Check out 'Framework for “Investment Contract” Analysis of Digital Assets' [1] > Crypto folks: NOT LIKE THAT. The regulators have been super clear, the crypto folks just don't like what they're seeing. They saw people who didn't ask make money, and people who did ask get shut down. So they didn't ask. But the noble ostrich is only able to keep their head in the sand for so long. [1] https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an...
  - joefigura 4y ago
    That guidance is about ICOs that are investment contracts. Lots of tokens appear to meet the definition of an investment contract, but not everything called an ICO is an investment contract. The whole point of that guidance is to help people issuing an ICO to determine what's an investment contract. But Coinbase doesn't host any ICOs, and they reject ICO tokens that look like securities! Here is Coinbase's guidance to its users on that point: https://help.coinbase.com/en/coinbase/getting-started/crypto-education/altcoins-and-icos https://help.coinbase.com/en/coinbase/getting-started/crypto... They say as much in their press release, if anyone would read it: "Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange... This process includes an analysis of whether the asset could be considered to be a security, and also considers regulatory compliance and information security aspects of the asset. 90%+ of assets that we review are not ultimately listed on Coinbase because they do not meet these standards." Coinbase says they don't list digital assets that could be considered securities! Everyone's hand-waving that Coinbase has obviously done something wrong, but no-one can point out specifically what. There's a disagreement on fact here - either the SEC tells Coinbase what it's doing wrong, and they can comply, or they don't and it gets settled by a court. Edit: Updated the comment since articbull rightly pointed out that Coinbase does list some tokens that were originally issued in ICOs.
tarunupaday 4y ago
So, I am not saying the crypto community (or Coinbase) is right or wrong here. But it's not as clear-cut as OP makes it out. While Howey's test is well-known, each crypto asset can be argued to pass or fail for different reasons: 1. The biggest issue is what constitutes a "common enterprise"? Most federal courts (but not all) have defined it as a horizontal structure where assets are pooled. (https://core.ac.uk/download/pdf/159597203.pdf https://core.ac.uk/download/pdf/159597203.pdf) Coinbase can argue that a straight purchase of a crypto token has no "common enterprise" because there is no pooling of assets. 2. It's not trivial to prove that profit for a given crypto token comes from the "efforts of the promoter or third party." Who even is the promoter of a distributed token? What identifiable third party's efforts is the profit in the crypto sale even dependent on? 3. Finally, is there always an expectation of profit? How is buying a vanity NFT different from purchasing a vanity domain that I do not use? What about a vanity NFT avatar I want to show off on Twitter / Reddit / Telegram? It's a complex case with lots of nuances. Whichever way courts rule - it will set new precedents. What we have here is different from the allegations that the SEC has made against other crypto entities, which were mostly about mixing consumers' assets, insider trading, improper disclosures during promotions or even straight-up money laundering. Those cases were not going to set new case law. This case will.
- djbusby 4y ago
  Crypto is a group buying and selling fractional ownership of the "diamond ring" - or rather - this perspective could pass Howey (NAL)
- SAI_Peregrinus 4y ago
  Staking is a pooling of assets. A coin is a commodity, a stake in a currency is a security. An iPhone is a commodity, a stake in Apple (shares of their stock, corporate bonds, etc.) is a security.
  - pa7x1 4y ago
    I think you forgot a prong in the Howey test. "With the expectation of profit from the effort of others." There are various forms of staking, if it requires running your own validator the expectation of profit is derived from your own effort. Therefore not a security.

by brasic 4y ago

petesergeant 4y ago

Not disputing this, but does that mean buying forex is a security, and if not, what stops it being? My guess is that foreign governments aren’t counted as 3rd parties / promoters?

fnordpiglet 4y ago
Forex is not a security because it’s not an investment in an enterprise but an exchange of like for like of legal tender. Otherwise the money changers at airports would be regulated by the SEC and they would have to register their currency exchange, and any international transaction would have to be disclosed and regulated by the sec in literally every single case. Plus the SEC has no authority either of the treasury of the US nor any other governments treasury.
- cdiddy2 4y ago
  so having another country declare a crypto as legal tender makes it no longer a security in the US?
  - klodolph 4y ago
    Feels like the answer to these questions is just gonna be “maybe such a case in the future will make it to the courts, and the courts will have to come up with an interpretation here.” We can make guesses about what the courts will decide but how confident are we in our guesses?
    - cdiddy2 4y ago
      its already the case with el salvador and bitcoin. bitcoin wasn't really under question though for being a security so would need someone to make a smaller token legal tender
  - lxgr 4y ago
    A currency being legal tender presumably has little bearing on whether the U.S. would consider it a currency. Some countries don‘t even have the concept of legal tender, while others recognize currencies they don’t issue themselves. Being issued by a sovereign state would probably be a better test.
    - kyboren 4y ago
      > Being issued by a sovereign state would probably be a better test. Aha, so they just need another layer of indirection. Acting on the imprimatur of the country's central bank, programmatically issue a sovereign CBDC upon the deposit of BTC. Keep cryptographic proof of 100% BTC reserves at all times to provide ultimate credibility for your (potentially parallel) currency (so you can keep using dollars or pesos or whatever in your real economy). Allow intra-CBDC transfers for 0.1% fee and programmatic redemptions for BTC for 0.2%. Profit. `ping -i1 www.bcr.gob.sv`...
    - Xorakios 4y ago
      The economic definition of "legal tender" is sometimes obscured in casual conversation. It isn't "issued by a sovereign state" - that's "fiat" but rather "used for paying taxes." And sometimes, like in the US, debts ("all debts foreign and domestic"). Certainly it has to vary among countries of which I am ignorant, but generally in the Anglosphere it is debts, not payments, that trigger the definition of "legal tender."
  - fsckboy 4y ago
    an argument like that couldn't hurt, but if North Korea declared Apple stock to be legal tender, it wouldn't make Apple stock not a security.
dragonwriter 4y ago
> Not disputing this, but does that mean buying forex is a security, and if not, what stops it being?. I’m not sure the rationale (or if it is just an explicit designation), but forex (and some related derivatives) is commodity trading regulated by the CFTC rather than security trading regulated by the SEC. (I think a regulatory problem with cryptocurrency is that it is generally clearly one or the other, but not always clear which, and while the market would like crypto to be one category it is probably a messy split between the two, absent legislation defining it and assigning it as a category.)
- TylerE 4y ago
  Seems like a fairly clear line can be drawn unambiguously. If it’s, like Bitcoin, just a number in a ledger, it’s a commodity. As soon as you attach any specific data to it, like a smart contract or tieing it to a single, tangible object like a painting, or paying rewards to people who bought before a specified time, it’s no longer fungible. It isn’t a commodity.
  - pa7x1 4y ago
    Confidently wrong. Par for the course in HN.
    - TylerE 4y ago
      Such a detailed rebuttal.
      - pa7x1 4y ago
        There is nothing to rebut. Your argument has nothing to do with Security's laws or the legal jurisprudence around it. It can be substituted by "if it starts with B like Bitcoin, it's not a Security" which contains exactly the same amount of argumentative power. It takes significantly more time to construct a rebuttal than to produce a gish gallop of senseless arguments like the one above. So I will simply refer you to this link: https://isethereumasecurity.com/ https://isethereumasecurity.com/
michael_vo 4y ago
If you just exchange usd for euro that’s not an expectation of profit per se. And no one is taxed for this action. If you’re a day trader of forex usually at the end of the day you would settle back into your default currency. Your gains from this is taxed. But usually when doing this you’re buying derivative products that are explicitly securities with maturity dates.
- lrvick 4y ago
  If you are buying euros as a hedge against USD inflation then you are expecting a potential of profit, or at least lowering losses. Same with precious metals, or Bitcoin.
  - deleted 4y ago
    [deleted]
  - michael_vo 4y ago
    I agree if it’s part of your investment portfolio. The profit part comes when you cash it back into your default currency in order to use it or to realize the gains. If you bought btc, used it to buy goods, and never cashed it back to usd then I think it is a currency.
    - charcircuit 4y ago
      You realize gains when you use another currency to buy something. So if you exchange USD for Euro and then the price of Euro goes up by 5% then when you buy a sandwhich with that money you have to pay taxes on 5% of the price of that sandwhich. Unless you convert your USD to Euro at the time of the transaction buying things with euro can turn into a tax nightmare since you have to keep track of the exact time you purchase something to know the exact exchange rate. If this wasn't the case you could just avoid capital gains by buying something with eulos and reselling it for usd with no profit.
      - Xorakios 4y ago
        In the US the taxable event generally occurs when one currency is converted back to USD, not when a non-USD currency is spent. Real-time conversions do occur and you are absolutely correct it can turn into a tax nightmare when traveling :(
darksaints 4y ago
There is a broad array of explicit exemptions from the Securities Act of 1932. Municipal bonds, for example, are not regulated by the SEC because they are explicitly exempted. Interest bearing bank acceptances or commercial paper with maturities less than 180 days or 270 days respectively are also explicitly exempt. Since coinbase’s offering has no maturity date, and money can be withdrawn at will, my guess is that they are trying to argue that this is an exempt security. TBF, I don’t see much difference between this and a foreign-denominated interest bearing bank account. There’s a lot of crypto==bad posting going on, and I generally agree with the crypto==bad crowd, but this is hardly a clear matter and likely needs to be taken to court to resolve. The SEC has a long history of turf wars with other regulatory agencies and regulatory overreach beyond their congressional authorization. They have lost 4 out of their last 5 Supreme Court cases related to cryptocurrency. I wouldn’t be surprised if their refusal to clarify is because they know they wouldn’t prevail in court and are trying to get away with setting precedent in the court of public opinion. It certainly looks like it’s working, judging by the opinions in this thread.
- pa7x1 4y ago
  Current SEC's position seems to be mostly political posturing by Gary Gensler, and not necessarily based on technical or regulatory merits. There is strong dissent within the SEC with its most recent actions. Most notably by Hester Peirce, one of the 5 SEC commissioners. Something smells afoul at the top of the SEC. You can watch a very interesting recent interview with her here: https://www.youtube.com/watch?v=kvsJM0regpw https://www.youtube.com/watch?v=kvsJM0regpw Or read some of her recent dissents: https://www.sec.gov/news/statement/peirce-statement-kraken-020923 https://www.sec.gov/news/statement/peirce-statement-kraken-0...

yawnr 4y ago

So — housing?

agency 4y ago
- Any profit comes from the efforts of a promoter or third party
- autoexec 4y ago
  Couldn't that apply to just about anything the moment anyone anywhere says "Buying X is a good investment!" so long as it's possible that the promotion resulted in X selling at a higher price?
- yawnr 4y ago
  A broker?
ghouse 4y ago
If a Real Estate Investment Truest (REIT), then yes.
rafram 4y ago
Housing isn’t an investment in a common enterprise.
- simple-thoughts 4y ago
  False. If your local governing agency (whether private or public) fails to maintain the local parks, schools, and roads, the value of your house will fall. Houses are securities according to the Howey test.
  - Godel_unicode 4y ago
    No they aren’t. “The respondent companies are offering something more than fee simple interests in land…they are offering an opportunity to contribute money and to share in the profits of a large citrus fruit enterprise.” https://recaldelaw.com/do-security-regulations-cover-real-estate-investments/ https://recaldelaw.com/do-security-regulations-cover-real-es...

joefigura 4y ago

Coinbase claims that none of the crypto assets it lists meet that test. For the coins Coinbase lists: - Criteria #2 is debatable - They don't meet criteria #3 - Or they don't meet criteria #4 Lots of coins look like commodities. They represent a digital asset, not ownership in a common enterprise or a loan. CFTC officials have said as much, as Coinbase quoted: "the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil…or crypto assets." - Then-CFTC Commissioner Quintenz Coinbase believes that all of the tokens they list are securities. The SEC needs to tell Coinbase specifically what it believes they are doing wrong - it will have to eventually, if it files suit. It feels like a lot of people have knee-jerk crypto=bad reactions. But read their press release - it really sounds like Coinbase is trying their best to comply with U.S. regulation, and the regulators aren't doing their jobs. And last - For digital assets that do look like securities, the SEC provides no way to register them, and thus vaguely implies that Americans can't own digital securities. That's not their decision to make - they either have to do their job and regulate crypto securities, or get congress to ban them. Edit: arcticbull pointed out that many digital assets do seem like securities (ICOs). Updated this comment with Coinbase's claim that they don't list any tokens that resemble securities

arcticbull 4y ago
Sure they do. Explanation here. [1] > Crypto folks: We want regulatory clarity. > SEC: Check out 'Framework for “Investment Contract” Analysis of Digital Assets' [1] > Crypto folks: NOT LIKE THAT. The regulators have been super clear, the crypto folks just don't like what they're seeing. They saw people who didn't ask make money, and people who did ask get shut down. So they didn't ask. But the noble ostrich is only able to keep their head in the sand for so long. [1] https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an...
- joefigura 4y ago
  That guidance is about ICOs that are investment contracts. Lots of tokens appear to meet the definition of an investment contract, but not everything called an ICO is an investment contract. The whole point of that guidance is to help people issuing an ICO to determine what's an investment contract. But Coinbase doesn't host any ICOs, and they reject ICO tokens that look like securities! Here is Coinbase's guidance to its users on that point: https://help.coinbase.com/en/coinbase/getting-started/crypto-education/altcoins-and-icos https://help.coinbase.com/en/coinbase/getting-started/crypto... They say as much in their press release, if anyone would read it: "Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange... This process includes an analysis of whether the asset could be considered to be a security, and also considers regulatory compliance and information security aspects of the asset. 90%+ of assets that we review are not ultimately listed on Coinbase because they do not meet these standards." Coinbase says they don't list digital assets that could be considered securities! Everyone's hand-waving that Coinbase has obviously done something wrong, but no-one can point out specifically what. There's a disagreement on fact here - either the SEC tells Coinbase what it's doing wrong, and they can comply, or they don't and it gets settled by a court. Edit: Updated the comment since articbull rightly pointed out that Coinbase does list some tokens that were originally issued in ICOs.

tarunupaday 4y ago

So, I am not saying the crypto community (or Coinbase) is right or wrong here. But it's not as clear-cut as OP makes it out. While Howey's test is well-known, each crypto asset can be argued to pass or fail for different reasons: 1. The biggest issue is what constitutes a "common enterprise"? Most federal courts (but not all) have defined it as a horizontal structure where assets are pooled. (https://core.ac.uk/download/pdf/159597203.pdf https://core.ac.uk/download/pdf/159597203.pdf) Coinbase can argue that a straight purchase of a crypto token has no "common enterprise" because there is no pooling of assets. 2. It's not trivial to prove that profit for a given crypto token comes from the "efforts of the promoter or third party." Who even is the promoter of a distributed token? What identifiable third party's efforts is the profit in the crypto sale even dependent on? 3. Finally, is there always an expectation of profit? How is buying a vanity NFT different from purchasing a vanity domain that I do not use? What about a vanity NFT avatar I want to show off on Twitter / Reddit / Telegram? It's a complex case with lots of nuances. Whichever way courts rule - it will set new precedents. What we have here is different from the allegations that the SEC has made against other crypto entities, which were mostly about mixing consumers' assets, insider trading, improper disclosures during promotions or even straight-up money laundering. Those cases were not going to set new case law. This case will.

djbusby 4y ago
Crypto is a group buying and selling fractional ownership of the "diamond ring" - or rather - this perspective could pass Howey (NAL)
SAI_Peregrinus 4y ago
Staking is a pooling of assets. A coin is a commodity, a stake in a currency is a security. An iPhone is a commodity, a stake in Apple (shares of their stock, corporate bonds, etc.) is a security.
- pa7x1 4y ago
  I think you forgot a prong in the Howey test. "With the expectation of profit from the effort of others." There are various forms of staking, if it requires running your own validator the expectation of profit is derived from your own effort. Therefore not a security.