Howey Test-SEC-ICOs

SEC Working Out ICO Regulation With HoweyCoin

ICOs Review

The SEC has been extremely active lately working to develop the best regulation for ICOs by experimenting with the system itself through a faux ICO – HoweyCoin.


The SEC launched a mock ICO last month called HoweyCoin, to help play catch up in the cryptocurrency and ICO game. It is clearly named after the Howey Test which “touts an all too good to be true investment opportunity.” Users who attempt investing in the token sale will be redirected to the regulator’s education tools. They are aimed at pointing out the signs of fraudulent token sales.

“HoweyCoins utilize the latest crypto-technology to allow travelers to purchase all segments without these limitations, allowing HoweyCoin users to buy, sell, and trade in a frictionless environment – where they use HoweyCoins to purchase travel OR as a government-backed, freely tradable investment – or both!”

Getting out of the “sandbox”

Commissioner Hester Peirce spoke on ICO development last month with almost radical opinions on the topic. Blockchain sandboxes have become popular amongst global regulators, and advocates argue that they are a means of satisfying regulators without quashing innovation. However, Peirce sees them differently:

“Open communication” between regulators and ICOs is possible without a sandbox. Peirce advocated for a “lifeguard” approach where the regulator “watches over what is happening, but she is not sitting with sandcastle builders monitoring their every design decision.” Peirce regretted that the SEC has largely communicated with ICO issuers via its Division of Enforcement and cautioned that the Commission should not lead “with its enforcement powers.”

Valerie Szczepanik Named Senior Advisor for Digital Assets and Innovation

Ms. Szczepanik will be the first individual to fills this role created specifically in response to the rapidly growing and changing cryptocurrency space. She will coordinate efforts across all SEC Divisions and Offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including Initial Coin Offerings and cryptocurrencies. She was also named Associate Director in Division of Corporation Finance:

“Valerie recognized early on the securities law implications of developments like blockchain and distributed ledger technologies, and of cryptocurrencies, Initial Coin Offerings, tokenized securities, and other digital instruments.”