Seems that everyone is falling for this Howey Test ruse
SEC doesn’t use Howey test to determine if something is a security. Howey test is used by industry and courts when trying to determine if a transaction may fall under securities act, however this test doesn’t provide an exhaustive list, just a general list.
To determine if something is a security SEC has regulations that give a definition of what security is. Specifically in PoS case U.S. Code Chapter 15 states that:
" (1) The term “security” means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing."
You will notice parts I highlighted in bold - right to subscribe to or purchase, any of the foregoing -.
When applied to PoS crypto SEC seems to interpret that as owning PoS crypto gives you a right to delegate (subscribe) to PoS rewards (participation in any profit-sharing agreement) .
SEC believes this interpretation will give them domain over crypto regulation.
An alternate view is that crypto assets are commodities (since electricity is considered a commodity in US). As such they would be under domain of CFTC and not SEC allowing for less restrictions in starting, building and trading crypto. If you all remember Charles Hoskinson went to testify about crypto in front of Committee of Agriculture because they are in charge of commodity exchanges and trading. Video here
Here in Canada crypto is already treated as commodity and it works way better for everyone (including taxation) then if it was considered a security.
Language when it comes to law is very tricky. Just one word, term or a definition can change the course of a whole industry. This is why we can’t let regulators just say or pretend what they are saying is synonymous with the law. This is why language in media and the language we use when speaking about crypto matters.
For the record, if it ever comes up , ADA is a public commodity on a public decentralized network called Cardano.