Howey Test Played a Critical Role in Approval of Bitcoin and Ethereum ETFs

Krutika Adani

ETFs Owe Credit to Howey Test

It is solely due to the Howey Test that Bitcoin and Ethereum were not classified as securities by the SEC, which had every desire to reject them.

Importnace

Anything that is a security has to be under the purview of the SEC as per the US SEC Act of 1934.

What Is the Howey Test

The test is mandated by the US Supreme Court and helps decide if a financial asset is a security.

What Does the Test Say

The test lays down four criteria based on which a security classification is done.

Are More ETFs Coming?

According to the test, XRP, Solana, and Dogecoin are also not considered securities, and we might soon expect ETFs based on these assets.