SEC Howey Test and Crypto Tokens — 2025 Guide

{ "body": "A transaction is an investment contract if it involves (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profit, (4) derived from the efforts of others. Most token sales satisfy all four prongs.", "heading": "The Four Howey Prongs" }

{ "body": "Token presales and ICOs almost invariably satisfy all four Howey prongs. The investment of ETH or USD, pooling of resources in a common development effort, marketing of price appreciation potential, and reliance on developer team effort all point toward security status.", "heading": "Applying Howey to Token Sales" }

{ "body": "Fully functional utility tokens launched without presale or price appreciation marketing have the best chance of avoiding security classification. Airdrops to existing protocol users, decentralization milestones, and limiting investor expectations all reduce regulatory risk.", "heading": "How to Structure Around Howey" }