The Howey Test determines what qualifies as an "investment contract" and would therefore be subject to U.S. securities laws.
It is important for situating blockchain and digital currency projects with investors and project backers.
Certain cryptocurrencies and initial coin offerings (ICOs) may be found to meet the definition of an investment contract under the test.
The SEC has sought to clarify when digital assets meet the definition of an investment contract.
In the case of Howey, the buyers of Florida citrus groves saw the transactions as valuable primarily because the labor and expertise were provided by others.
This classified the transaction under what is now known as the Howey Test, and therefore it needed to be registered with the SEC.
Source: https://www.investopedia.com/