Blockchain tokens are regulated differently depending on the county of issuance and who tokens are sold to. The U.S. has the strictest regulation. Under the U.S. law, tokens can be considered securities. In such case, the issuance, sale, and subsequent resale of these tokens could be significantly restricted.

Other products offered by the crypto and DeFi companies such as coins, investment accounts, etc. can also fall under the U.S. securities law regulation if they meet a securities definition.

Under the U.S. securities law, securities include shares, stocks, notes, bonds, debentures, certificates of interest or participation in profit-sharing agreements, preorganization certificates or subscriptions, and investment contracts. While some types of securities are specifically defined, an investment contract does not have a statutory definition and can be determined by the Courts. 

The Howey Test is one of the most commonly used tests by the SEC and the U.S. Courts to analyze whether a token constitutes an investment contract and, as a result, a security.

An investment of money, which is broadly defined and includes any consideration with value,

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Into the common enterprise, which is further defined by different courts as a vertical and/or horizontal commonality of risks and profits among investors in some proportion

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With the expectation of profits, which is also broadly defined as any form of capital appreciation, cash return on investment or other earnings such as dividends and interest

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Solely from the efforts of the promoter or a third party, whose actions must play a significant role in the success of the business

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INVESTMENT CONTRACT

Each State also has its own securities law, which has to be taken into an account, when selling tokens or other products resembling investment contracts to the residents of these States.