# Legal Tests for Securities Classification

**Legal Tests for Securities Classification** are a set of frameworks developed by regulators and courts to determine whether a financial instrument or digital asset (like a token) qualifies as a “security” under the law. This classification is critical because securities are subject to strict regulations related to issuance, trading, disclosure, investor protection, and licensing.

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### 🔍 What Are Legal Tests for Securities Classification?

These legal tests are **judicial or regulatory criteria** used to assess the nature of a given financial instrument. If an instrument is classified as a security, its issuance, distribution, and trading must comply with **securities laws**, including registration requirements or exemptions.

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