University of Chicago Professor M. Todd Henderson and NYU Professor Max Raskin proposed an operational test for determining whether a digital asset should be considered a security under Securities Act Sections 2 and 3. The professors described how to apply the Howey test for an "investment contract" to digital assets in order to determine which types of digital assets should be regulated as securities. The professors propose a test to (i) identify which digital assets are "sufficiently decentralized," so that they should not be considered "securities" (as there are no promoters or issuers), and (ii) distinguish those digital assets purchased for investment purposes, which should be classified as "securities," from those purchased for utility or consumption, which should fall outside the scope of securities regulation.
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