Ex-Head of CFTC Affirms Most Initial Coin Offering Tokens are Securities by Law
Former CFTC Head Affirms: Most Tokens From ICOs Are Securities
Gary Gensler, the former chairman of the U. S. Commodity Futures Trading Commission (CFTC), has recently affirmed that most of the Initial Coin Offerings (ICOs) made since last year have created tokens that can be a considered a form of securities. The comments were originally made during the Institutional Crypto: Laying the Foundation conference in New York and it was sponsored by Bloomberg LP, the parent company of Bloomberg News.
If the government were to adopt this opinion and consider these assets to be securities, the tokens and the crypto exchanges would have to receive greater scrutiny from agencies like the Securities and Exchange Commission (SEC) and the CFTC.
The Howey Test
Gensler affirmed during the event that one of the ways that a regulator can use to determine whether an asseet will be considered a security or not is the Howey Test. This test was created by the Supreme Court in 1946 to determine whether a contract could be considered an investment or not.
According to the test, you can consider an investment contract a security if it has four aspects: it is an investment of money, there is an expectation of profits, the money is in a common enterprise and any profit will come from the effort of a promoter or a third party.
Gensler has stated that Ether (ETH) could initially have met the requirements to be a security, but it has become more decentralized since then.
— Bloomberg TV (@BloombergTV) October 15, 2018