Hinman Test

The Hinman Test is a legal guideline used by the U.S. Securities and Exchange Commission (SEC) to determine whether a cryptocurrency or token should be classified as a security. It considers whether the token was sold with the expectation of profit derived from the efforts of others. If so, it’s more likely to be considered a security, which means it’s subject to specific regulations. The test helps clarify when digital assets fall under existing securities laws, balancing innovation with investor protection.