A Forbes article raises the question of whether the TRUMP token, associated with incoming U.S. President Donald Trump, qualifies as a security under the Howey Test.
What Is the Howey Test?
The Howey Test is a legal standard established by the U.S. Supreme Court to determine if an asset is a security. Its criteria include: monetary investment, common enterprise, expectation of profit, and efforts of others.
Securities Criteria and TRUMP
1. Monetary Investment: TRUMP is purchased with money or cryptocurrency. 2. Common Enterprise: Trump-related entities control 80% of tokens. 3. Expectation of Profit: Marketing of TRUMP aims to generate profit expectations. 4. Efforts of Others: Trump's involvement in marketing and token decisions.
Legal Implications for TRUMP
If TRUMP is deemed a security, it must comply with SEC regulations, including registration and information disclosure. Although the Trump administration is expected to be crypto-friendly, existing securities laws remain in force.
The allegations against TRUMP as a potential security highlight the regulatory challenges in the rapidly evolving cryptocurrency space. The question of regulation remains open in light of the new administration's stance.
