The US laws are very different, the Howey Test (named after a case involving sales of orange orchards owned by a guy named Howey that went to the Supreme Court). From FindLaw:
A transaction is an investment contract if:
- It is an investment of money
- There is an expectation of profits from the investment
- The investment of money is in a common enterprise
- Any profit comes from the efforts of a promoter or third party
It has to meet all of these requirements. I personally (I’m not a lawyer) find 2. a real stretch to apply to a mAsset since they don’t give any right to the underlying stock, do not pay dividends. Anyone’s “expectation of profits” comes purely from their personal opinion of the underlying asset and its price. Certainly no one at TFL is saying any specific mAsset will give profit and if third parties make that claim it’s not anything to do with TFL.
In fact both 3 and 4 also seem like a stretch - is a mAsset a “common enterprise”? That doesn’t seem to be true any more than buying any good that has a market price is a “common enterprise”. And do any profits come from the “efforts” of a promoter or third party? The only “efforts” there are is providing the infrastructure, but that does not provide the actual profit, that comes from market prices of the underlying asset and that owner - Apple, GME, etc. is not involved in TFL or the mAsset existence in any way.
Another person has mentioned to me that mAssets could be deemed illegal under laws that concern “bucket shops” which date from the 1920s and before. From Wikipedia:
"A bucket shop is a business that allows gambling based on the prices of stocks or commodities. A 1906 U.S. Supreme Court ruling defined a bucket shop as “an establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in”.
I haven’t researched that much but it seems a little far fetched to classify buying a mAsset as “a bet”. I do know that in the 2000s the CBOE did allow creation of “binary futures” which sound awfully like these bucket shop instruments. They are an all-or-nothing instrument that depends on if an asset trades above or below a certain number within a certain time. One interesting quirk of that decision was they decided to only allow binary futures on events that affect things you could actually own as an asset, that allows them to be used as a hedge which they deem a good thing. So binary option on stock or index price - yes. Binary options on house price indexes - yes because you can own property and use it to hedge against a price crash. Binary options on hurricane season severity - yes, because hurricanes damage crops and property. Binary options on election outcome - no, too difficult to define how that impacts your real world assets in any general way. Binary options on sports events - no, ditto.
But such binary options were regulated and had to be approved by the CBOE. In Europe they are much freer - binary options are freely available on sports results, political events, and many other outcomes. Remember that sports betting “against the house” is not widely legal in the US except for in Vegas and on tribal reserves. Anyway IMO mAssets are in no way “binary options” so it’s a moot point IMO.