Regulatory change in the crypto realm has been a subject of heated debate for many years. The general ethos of cryptocurrency is one of anarchism or anarcho-capitalism. Proponents of the tech tend to be adamantly against any type of governmental intervention into markets or technology.
However, as digital assets and blockchain technology find themselves thrust into the mainstream, governments must respond. They must either incorporate these assets into existing regulations or create a new regulatory framework altogether.
Lets look at how crypto regulations have evolved over the years, with a focus on US regulation.
Background: Crypto Regulation in the US
Much of the conversation surrounding cryptocurrency regulation in the US has been focused on something called the Howey Test. Having its roots in a landmark Supreme Court case from 1946, The Howey Test provides the criteria used to determine whether or not something can be considered a security, aka an investment contract.
The test has four parts, and says that a security is:
1. An investment of money;
2. In a common enterprise;
3. With the expectation of profit; and
4. Those profits being derived from the efforts of others.
If an investment aligns with all four of these precepts, then it can be considered a security, meaning it falls under the regulatory jurisdiction of the Securities and Exchange Commission (SEC ).
The…
