Series 63 practice questionhardHard: Cryptocurrency Application
A promoter sells tokens to fund the development of a new blockchain network, promising buyers will profit as the network grows, but buyers have no control over development. Under the USA and Howey Test, these tokens are:
- ASecurities, because they are investment contracts✓ Correct answer
- BNot securities, because cryptocurrencies are not regulated
- CSecurities only if traded on a U.S. exchange
- DNot securities, since digital assets are not listed in Section 401(l)
Explanation
Why A — Securities, because they are investment contracts
This token offering meets all prongs of the Howey Test, making it an investment contract and therefore a security under the USA, even if digital assets are not specifically listed.
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