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Series 63: Regulation of Securities & Issuers
Series 63 practice questionhardInvestment Contracts — Economic Reality

When analyzing whether a digital token is an investment contract, which fact is MOST important?

  1. AWhether purchasers invest value in a common enterprise with a reasonable expectation of profits derived from the essential efforts of others✓ Correct answer
  2. BWhether the token has a fixed maximum supply
  3. CWhether the token's name includes the word governance
  4. DWhether transactions are recorded on a public blockchain
Explanation

Why AWhether purchasers invest value in a common enterprise with a reasonable expectation of profits derived from the essential efforts of others

Investment-contract analysis focuses on economic reality: an investment of value in a common enterprise with a reasonable expectation of profits derived from the essential managerial or entrepreneurial efforts of others. Labels, token supply, and blockchain architecture are not dispositive.

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