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Howey test
The Howey test is the US Supreme Court's test, from a 1946 case, for whether a deal is an 'investment contract' and so a security: an investment of money, in a common enterprise, with an expectation of profits from the efforts of others. The SEC applies it to crypto assets.
What it means for you. In the US, the SEC's 2026 interpretation says a token can be sold under an investment contract and later separate from it: while buyers reasonably expect the issuer's promises of essential managerial efforts to stay attached, resales can be securities transactions; once those promises are fulfilled or publicly abandoned, the token is no longer subject to it. Buyers in an unregistered offering keep rights against the issuer.
Sources: SEC and CFTC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Release 33-11412, 2026), SEC: Framework for 'Investment Contract' Analysis of Digital Assets (superseded 2026) · checked 4 October 2026
Security token
A security token — the SEC calls it a digital security, commonly a tokenized security — is a stock, bond or other security issued as a crypto asset, with the ownership record kept wholly or partly on a blockchain. In the US, it remains a security, and the securities laws apply to it.
What it means for you. In the US, the SEC says a tokenized share or bond can carry rights that differ materially from the underlying security, including economic and voting rights, and whether the issuer or an unaffiliated third party tokenized it changes what you actually hold. Offers and sales of securities must be registered with the SEC or fit an exemption.
Sources: SEC and CFTC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Release 33-11412, 2026), SEC: Crypto assets and the federal securities laws, SEC investor alert: Exercise Caution with Crypto Asset Securities · checked 4 October 2026