Ether is probably security, but the SEC probably won’t recognize it as such
The Howey Test provides a tool to measure whether an instrument is a security. We know for sure that ether does not confer equity in the Ethereum Foundation (EF); however, it is quite obvious from the very beginning that the value of ether depends on the performance of EF & the Ethereum ecosystem: Critically, the value of ether is not predefined.
This is quite different from a real “utility token” such as a coupon. A coupon is not a security because even though it may save the holder some money, its value is predefined and does not depend on the activities of the issuer.
Other aspects of the Howey Test are much clearer: It is an investment of money to EF with anticipation of profit. Thus, ether is a security.
However, I don’t personally think SEC will recognize ether as a security, because doing so will cause unnecessary confusion in a market that the governments want to prosper (my personal feeling).
There’re so many tokens flooding the market, so I feel there’s a need to classify them a bit. In my personal view, we have:
- Equity: Are there any notable ones?
- Debt: No one wants to say they’re issuing debt.
- Financial instruments: Most.
- Utility (another area IdeaFeX wants to focus on)
- Coupon: preference to use
- Ticket: right to use
This is purely personal opinion, not legal or investment advice.