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  1. Home
  2. /Glossary
  3. /Howey Test
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traditional-finance

Howey Test

The legal test the SEC uses to determine if something is a security.

Definition

The legal test the SEC uses to determine if something is a security. An asset is a security if it involves an investment of money, in a common enterprise, with the expectation of profits, primarily from the efforts of others. The SEC has used this test to argue that many crypto tokens are unregistered securities.

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GuideCrypto Regulation Guide

Related Terms

Securities Classification

The legal determination of whether a crypto token qualifies as a security under financial law.

Accredited Investor

Someone who meets specific income or net worth thresholds set by regulators, qualifying them for investments not available to the general public.

Compliance

Following the laws and regulations that apply to financial activities, including crypto.

Anti-Money Laundering (AML)

Laws and procedures designed to prevent criminals from disguising illegal funds as legitimate income.

Asset Allocation

How you divide your investments across different asset classes like stocks, bonds, crypto, and cash.

Blue Chip

A well-established, financially sound company or crypto project with a proven track record.

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