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Is Cryptocurrency Like Stocks and Bonds? Courts Move Closer to an Answer.
Federal judges are weighing whether digital currencies should be subject to the same rules as stocks and bonds. The outcome could shape crypto’s future in the U.S.
For more than a decade, the pioneers of the cryptocurrency industry envisioned digital coins as an alternate branch of finance, a renegade sector that would operate outside the reach of big banks and government regulators. But as digital currencies like Bitcoin and Ether became more mainstream, the crypto industry collided with a 1946 Supreme Court decision that created what is known as the Howey Test, a legal analysis that determines when a financial product becomes subject to the same strict rules as stocks and bonds. Without a clear contractual agreement between the buyer of a digital coin and its issuer, the lawyers have said, a cryptocurrency is no different from any other “collectible” that might rise in value over time, like baseball cards or Beanie Babies dolls.
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