As part of its effort to assist parties seeking to comply with U.S. federal securities laws, the SEC's FinHub has published a framework "for analyzing whether a digital asset is offered and sold as an investment contract, and, therefore, is a security."

Although not binding, the framework is intended to be "an analytical tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset."

The analysis follows the "Howey test" to qualify digital assets as securities under four criteria. While this approach was adopted in prior decisions and statements, this guide provides details on practical elements that might contribute to the decentralized qualification of the digital asset and its underlying network.

The Commission's Division of Corporation Finance has also issued a response to a no-action request in relation to TurnKey Jet, Inc,  indicating that it "will not recommend enforcement action to the Commission if the digital asset described in the request is offered or sold without registration under the U.S. federal securities laws."

The statement reminds market participants to be aware that they may be conducting activities that fall within SEC jurisdiction,  for example, if they "engage in activities that require registration of transactions and persons or entities involved in those transactions."  

The statement continues that even where registration is not required, activities involving digital assets that qualify as securities may still be subject to SEC regulation and oversight.

The Framework identifies such activities as:

  • offering, selling, or distributing
  • marketing or promoting
  • buying, selling, or trading
  • facilitating exchanges
  • holding or storing
  • offering financial services such as management or advice
  • other professional services