Security Tokens Speculative and Non-speculative Should Pass Howey TestOctober 7, 2018
Every security token should pass the Howey test to qualify as a security token per regulatory standards.
It matters for security tokens to pass the Howey test to win regulator and investor confidence. Needless to say, it needs to be compliant with other regulatory norms.
The original court ruling by Justice Murphy stated: “If that test is satisfied, it is immaterial if the enterprise is speculative or nonspeculative, or whether there is a sale of the property with or without intrinsic value.” Therefore, anyone who is planning to make a profit from the efforts of someone else is buying a security token. It is like an awful lot of investors buying security tokens with a hope that it wins.
SEC’s report sent shockwaves to the capital raising entities in the cryptocurrency world through their report. The fundamental principles of the U.S. Federal Securities Laws designate the principles applicable to the organizations involved in raising capital whether in distributed ledger or blockchain technology. Automation of smart contracts, computer code, and sale of securities come under the purview of US Federal Securities Laws.
Several securities have passed the Howey Test and are safe and around. Leaseum Partners, an early stage token has done sufficient tasks to ensure regulatory compliance, and they are all ready and reliable before any retail hype builds up around it. They satisfy every test rule meant for the Howey Test. There is money invested, and profits are expected on investment, and the fund is a common enterprise, and the profits are going to come from the efforts of the third party.
Functional cryptocurrencies and security tokens are evolving under the arms of SEC, thus creating an ambient air for those interested in real estate tokens and security tokens. The most promising crypto projects that attract token investors are those that are regulated.
SEC will crackdown on anything about financials and contracts. Though it is claimed that middlemen will be removed from the system, when it comes to solving complex supporting services middlemen will regain their importance to help with regulatory compliance. Whether with solicitation of investor interest, marketing materials, or underwriting it might not be easy to do away with middlemen. Human intervention will be paramount despite advancements in the technological sphere.
Several token issuance platforms are competing to catch up on their value. To name a few are Polymath, Swarm, Tokeny, Leaseum Partners and more.
So, anything that is labeled as security should conform to the features that can be attributed to Security Tokens for worthy investment interest. The idea of cryptocurrencies existing without government intervention would not work anymore.