The U.S. Securities and Exchange Commission (SEC) has made slow but steady progress toward regulatory oversight of cryptocurrencies. While most digital currencies were founded on the principle of decentralization, as the industry has grown in popularity, the U.S. government has seen fit to begin stepping in.

The biggest question so far has been whether or not digital currencies should be classified as securities. If so, according to policies which have been in play for close to a century, then they must be registered with the SEC. While this may be the fate of most cryptocurrencies, one venture capitalist has reason to believe that bitcoin may be spared the regulatory hassle.

Bitcoin Unscathed?

A report by CNBC tracks the opinions of Blockchain Capital partner Spencer Bogart. Bogart believes that "along a spectrum, bitcoin is the furthest away from being a security from all of the crypto assets." As a result, Bogart says, "it is the least likely to come under a regulatory crackdown."

Bogart's statement comes just days after the SEC issued a statement dictating that digital assets which are classified as securities must be registered. (See also: SEC Says Crypto Exchanges Must Register With Agency.)

Does Crypto Pass the 'Howey Test'?

For many cryptocurrencies, the future rests on whether they are deemed securities by the U.S. government. In order to make the determination, the SEC uses a methodology known as the Howey Test.

This test, created by the U.S. Supreme Court, asks whether or not investors "contribute money to a common enterprise with the expectation of profit" which is earned solely through the "efforts of others," Bogart explained.

Bogart believes bitcoin does not meet the requirements of the Howey Test. "In the case of bitcoin, that just never has been the case," he said. "There was nobody that launched bitcoin and said...'I'm going to sell you 20% of the coins for a specific price.'"

Rather, Bogart describes the growth of the world's largest digital currency as more organic. "The software was launched into the world. People started mining, and it grew," he said. "There is no central enterprise that receives the money that investors pay for bitcoin and deploy." The SEC has yet to issue a final statement regarding bitcoin.  (See more: Howey Test: Full Analysis.)

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.

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