I used to work for a global asset manager that was exploring what it might look like to create a bitcoin/cypto ETF. One of the reasons that we did not pursue this was because it was early days and the SEC was not sure how to categorize if bitcoin was a security or not/how it should be regulated. I agree with the current consensus of the SE where cryptocurrencies are autonomous and distributed networks that are designed to be decentralized. I think classifying a cryptocurrency as a security likely goes sharply against the goals of the crypto/blockchain ethos. However, I have an outstanding question around whether or not changes in codebases and forks would ever result in a reclassification? Seems like crypto will change and evolve and the SEC might need to adjust their classifications accordingly.
Another tangential thought is around ICOs. Today industry says that tokens aren’t equity, because they have intrinsic use and because they are “non-dilutive to the company’s capital”. So ICOs would technically fall in the perview of being a security and subject to regulation and punishments if abused. Currently, the US securities laws are already well-calibrated to address any ponzi and centralized investment schemes, so hopefully they can apply the same framework to ICOs.
The last thought is that I think we will see a need to update the Howey test, to better accommodate for the new type of currencies that may result from the digital revolution we are living through. If Web 3.0 bleeds into our financial market system we will need to address how the Howey test evolves to balance bad actors and regulation in a decentralized world where the investment of money may NOT be in a common enterprise
and profits DONT come from the efforts of a promoter or third party.