SEC crypto proposal wouldn’t clear up Howey ruling’s uncertainty
Davis Polk partner Joe Hall authored “SEC crypto proposal wouldn’t clear up Howey ruling’s uncertainty” in Bloomberg Law. In the piece, Joe argues that the SEC’s proposed Regulation Crypto Assets retains a source of uncertainty because it builds atop the 1946 Supreme Court case SEC v. W.J. Howey Co, a case involving orange groves and investment contracts.
Throughout the article, Joe compares crypto to the facts of Howey to illustrate the issue. He notes that “A better framework would establish objective conditions under which specified crypto assets and transactions are subject to the federal securities laws.”
Joe concludes by saying, “The thought experiment reveals the category error. Securities regulation should follow the investment arrangement, not the orange indefinitely through the produce market. The SEC should define the asset and regulate the developer’s capital raise, but allow the orange to remain an orange.”