Truman-Era Securities Ruling That Governs Crypto Needs an Update
A 1946 US Supreme Court ruling is deciding the fate of today’s digital token networks, and the results are irreconcilable. The test, from SEC v. Howey, treats a deal as a “security” when people invest in a common enterprise with an expectation of profits from others’ efforts.
This rule assumes a static instrument, but digital assets aren’t static. Many tokens function as lifecycle instruments: they may start like fundraising tools and later run as decentralized networks. A rule built for fixed arrangements doesn’t account for how most digital assets evolve.
Digital Asset Lifecycle
In the launch phase, a core team raises funds and promises to build a network. Early purchasers might expect profits tied to the team’s efforts,…
