Securities
Tradable financial instrumentsstocks, bonds, and in crypto context, some tokens regulated as securities.
Last Updated
2026-03-29
Related Concepts
What is Securities?
A security is a tradable financial instrument representing ownership or a debt obligation. The SEC regulates securities to prevent fraud and protect investors.
In crypto, many tokens likely qualify as securities under the Howey Test.
How does Securities work?
The Howey Test has four prongs investment of money, common enterprise, expectation of profits, and profits from others' efforts. If a token meets all four, it is a security and must register with the SEC or qualify for an exemption before being sold publicly.
Why does Securities matter?
A token classified as a security must comply with strict registration and disclosure requirements. Selling unregistered securities carries criminal liability for founders and project teams.
Key features of Securities
- Stocks and bonds are classic securities
- Many ICO tokens were unregistered securities
- Howey Test is the primary classification framework
- Exempt offerings (e.g., Reg D) allow sales to accredited investors without full registration
Examples of Securities
Bitcoin and Ethereum are not classified as securities. Most 2017-era ICO tokens were.
The SEC's Ripple lawsuit argued XRP sales to institutional investors constituted unregistered securities offerings.