 legal definition of a security.</p>
<p>In the US, the SEC uses the Howey test to determine whether something can be legally considered a security. The test comes from the Supreme Court ruling in 1946 for <em>SEC v. W.J. Howey Co</em>. It stipulates four criteria:</p>
<ul>
<li>Requires investment of money (fiat currency)</li>
<li>Money invested with expectation of profit</li>
<li>Invested money goes toward a common enterprise</li>
<li>Profit is generated by the efforts of a promoter or third party</li>
</ul