What is the Howey Test and Why Does It Matter In Crypto?

One of the bigger fights in crypto right now is over the definition of a security - what counts as a security, and who gets to decide - and therefore regulate - that. This isn’t just about semantics: the answer to that question affects trillions of dollars of assets in the United States, including crypto assets.

In December 2020, the SEC accused Ripple Labs, issuers of the Ripple token, of having conducted “an unregistered, ongoing digital asset securities offering that raised $1.3bn.

Nearly two years later, that fight is still ongoing. Most recently, Ripple asked the court involved to dismiss the SEC’s complaint. Among other things, Ripple does not agree with the SEC’s assertion that its token counts as a security.

Who’s right? And what are the consequences, either way? Bloomberg reporters Matt Robinson and Chris Dolmetsch and attorney Elizabeth Davis join this episode to explain.

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