Bloomberg Businessweek

The Ancient History of Bitcoin

Cryptocurrencies may appear frighteningly modern and disruptive. But they can still be regulated

In the 1920s a Florida citrus grower named William Howey hit on a way to raise money from investors. He would sell them strips of land in his groves and tend the trees on their behalf, giving them a share of the profit after the harvest. The transaction was presented as an ordinary sale of real estate, but for practical purposes the buyers had become shareholders in his farm. After Howey died in 1938, the then-new U.S. Securities and Exchange Commission sought an injunction against his company to stop the sales. In 1946 the Supreme Court ruled that Howey’s contracts should have been registered with the SEC as securities—essentially, shares of stock.

The court said that what matters is the substance of a transaction, not its form.

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