- He advises focusing on the agreement itself, not the asset.
- The SEC does not do this, what is the main essence of their mistake
Ava Labs General Counsel Lee Schneider shared his view on the application of the Howey test in the classification of cryptocurrencies.
Recall that the Howey test is the main weapon with which the SEC classifies many cryptocurrencies as securities. The logic here is this: investors invest in digital assets because they are counting on profit. At the same time, they do not develop the project themselves (this is done, for example, by developers), and use only the fruits of someone else’s fruit. Based on this, regulators believe that ether and many coins should be treated as securities.
Read more about the Howey test in our material:
Lawyer Lee Schneider believes that, in general, the test is a working tool. However, it should be applied to arrangements, not tokens.
For example, if we are talking about tokenized bonds, then they are considered securities. The same applies to tokenized rights to real estate, real art, company shares, etc.
“Everything can be tokenized, but not all tokens are the same”
The expert added that there are assets that, by definition, cannot be securities. For example, stablecoins, NFTs and blockchain tokens (the same bitcoin and ether).
“Everyone uses [тест Хоуи] to the token. Howie is not about things. We are talking about the mechanisms of the transaction”
He added that, if necessary, he could explain to the SEC why the AVAX token is not a security.