Neither the $DIVID platform token nor the ownership tokens of physical collectible items sold through the DiviD Fractional Collectibles Marketplace should be deemed a “security” as the term is currently defined under U.S. laws.
The securities laws enumerate 18+ kinds of financial instruments or other devices which qualify as securities. Among them is the “investment contract” which became something of a catch-all attack vector during former SEC Chairman Gary Gensler’s tenure for enforcement actions against Web3 projects which had not registered their coin/token offering or filed a notice of exemption with the SEC.
However, under Chairman Paul Atkins’ watch, the SEC (and the CFTC, led by Chair Michael Selig) is “charting a new course” and taking a more welcoming stance with respect to Web3 innovation. Despite the failure, to date, of the US Congress to pass the Digital Asset Market Clarity Act into law, the SEC and CFTC are moving forward in 2026 and 2027 under their own regulatory authority to give responsible innovation an opportunity to thrive in the United States while continuing to protect investors.
However, unless and until Congress passes the Clarity Act, “friendly” regulatory actions taken today could be undone by a new administration tomorrow. So, read on to more fully understand why $DIVID and the asset ownership tokens sold in the fractional collectibles marketplace could not reasonably be deemed “securities” even under existing federal law.
The Howey Test
Regulators and courts apply what is known as the “Howey Test” to determine whether a financial transaction amounts to an investment contract and thus qualifies as a security. This test was first laid out in SEC v. W.J. Howey Co., 328 U.S. 293 after an SEC enforcement action was decided by the U.S. Supreme Court in 1946.
To summarize the current formulation of Howey, the Supreme Court and subsequent case law have found that an “investment contract” exists when there is 1) an investment of money 2) in a common enterprise 3) with a reasonable expectation of profits 4) derived from the efforts of others. All four Howey factors must be met to find that an investment contract exists and that the financial transaction or instrument is a security.
As discussed below, the $DIVID token and the ownership tokens sold through the DiviD Fractional Collectibles Marketplace do not meet the four factors of the Howey Test, and are therefore not investment contracts or securities.
Ownership Tokens
DiviD’s collectible item ownership tokens are a kind of digital “certificate of ownership” which, when written to the public distributed ledger of the Ethereum blockchain network, simply serve to establish the token holder’s fractional ownership interest in a tangible item of personal property. Even if it were found that the purchase of collectible item ownership tokens is an “investment of money” in a “common enterprise” with a “reasonable expectation of profit” (and it is questionable whether these factors are even met) Howey analysis still fails. This is because any potential profit realized by co-owners upon the sale of a collectible item is derived exclusively from the market value appreciation of the physical asset, not by the managerial or entrepreneurial efforts of DiviD Fractional Collectibles Marketplace, which has only an administrative and custodial role with respect to the operation of the platform.
Thus, collectible item ownership tokens are not an “investment contract” nor any of the other 17+ kinds of financial instruments enumerated in the federal laws as securities. DiviD’s ownership tokens merely represent a fractional ownership interest in an otherwise indivisible physical item. An ownership certificate is no more an “investment contract” than a vehicle title or a real estate deed.
Platform Token
DiviD’s platform token ($DIVID) likewise does not meet the Howey factors and is neither an investment contract nor any other kind of security. Purchased $DIVID tokens have multiple immediate, consumptive uses on the platform as listed here which negate the existence of a “reasonable expectation of profits” on the part of token holders.