┌─────────────────────────────────────────────────────────────────────────────┐
│                    THE HOWEY TEST                                           │
├─────────────────────────────────────────────────────────────────────────────┤
│                                                                             │
│  1. INVESTMENT OF MONEY                                                    │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Did investors contribute money or assets?                        │   │
│  │ • Tokens acquired through investment (not mining or airdrop)       │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                    │                                        │
│                                    v                                        │
│  2. COMMON ENTERPRISE                                                      │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Are the investors' funds pooled?                                   │   │
│  │ • Is there a common business venture?                               │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                    │                                        │
│                                    v                                        │
│  3. EXPECTATION OF PROFITS                                                │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Do investors expect to profit?                                     │   │
│  │ • Is profit expected from the efforts of others?                   │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                    │                                        │
│                                    v                                        │
│  4. EFFORTS OF OTHERS                                                     │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Are profits generated by the efforts of a promoter/third party?   │   │
│  │ • Are investors passive, relying on others?                        │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                                                             │
│  IF ALL FOUR PRONGS ARE MET → THE TOKEN IS A SECURITY                     │
│                                                                             │
└─────────────────────────────────────────────────────────────────────────────┘

┌─────────────────────────────────────────────────────────────────────────────┐
│                    TOKEN CLASSIFICATION                                     │
├─────────────────────────────────────────────────────────────────────────────┤
│                                                                             │
│  1. PAYMENT TOKENS (Cryptocurrencies)                                      │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Used as a medium of exchange                                       │   │
│  │ • No expectation of profit from others' efforts                     │   │
│  │ • Examples: Bitcoin, Litecoin                                      │   │
│  │ • Regulatory treatment: Generally not securities                   │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                                                             │
│  2. SECURITY TOKENS                                                         │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Represent ownership, debt, or rights                             │   │
│  │ • Expectation of profit from others' efforts                       │   │
│  │ • Examples: Tokenised stocks, bonds, equity                         │   │
│  │ • Regulatory treatment: Securities regulations apply               │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                                                             │
│  3. UTILITY TOKENS                                                          │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Provide access to a product or service                            │   │
│  │ • May become securities if marketed as investment                  │   │
│  │ • Examples: BAT, Filecoin, ETH (debated)                           │   │
│  │ • Regulatory treatment: Varies, may be securities                  │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                                                             │
│  4. ASSET-BACKED TOKENS                                                     │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Represent ownership of physical assets                            │   │
│  │ • Examples: Gold-backed tokens, real estate tokens                 │   │
│  │ • Regulatory treatment: May be commodities or securities           │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                                                             │
│  5. HYBRID TOKENS                                                           │
│  ┌──────────────────────────────────────────────────────────────────────┐   │
│  │ • Combine multiple classifications                                  │   │
│  │ • Examples: Governance tokens with investment features              │   │
│  │ • Regulatory treatment: Case-by-case assessment                    │   │
│  └──────────────────────────────────────────────────────────────────────┘   │
│                                                                             │
└─────────────────────────────────────────────────────────────────────────────┘

# ===================================================================
# MODULE 5, LESSON 2: SECURITIES LAWS AND TOKEN CLASSIFICATION
# ===================================================================

import pandas as pd
import matplotlib.pyplot as plt
import numpy as np
from typing import Dict, List, Optional
import warnings
warnings.filterwarnings('ignore')

print("="*70)
print("SECURITIES LAWS AND TOKEN CLASSIFICATION")
print("="*70)

# ----------------------------------------------------------------
# PART A: HOWEY TEST ASSESSMENT TOOL
# ----------------------------------------------------------------

print("\n" + "-"*60)
print("PART A: Howey Test Assessment Tool")
print("-"*60)

class HoweyTest:
    """
    Simplified Howey Test assessment for token classification.
    """
    def __init__(self, token_name: str):
        self.token_name = token_name
        self.prongs = {
            'investment_of_money': None,
            'common_enterprise': None,
            'expectation_of_profits': None,
            'efforts_of_others': None
        }
        self.assessment = {}
    
    def assess_prong(self, prong: str, score: float) -> None:
        """Assess a prong with a score (0 = no, 1 = maybe, 2 = yes)."""
        self.prongs[prong] = score
        status = {0: 'No', 1: 'Unclear', 2: 'Yes'}
        print(f"  {prong.replace('_', ' ')}: {status.get(score, 'Unknown')}")
    
    def get_result(self) -> Dict:
        total_score = sum(self.prongs.values())
        max_score = len(self.prongs) * 2
        percentage = total_score / max_score
        
        if percentage > 0.75:
            classification = 'Likely a Security'
        elif percentage > 0.5:
            classification = 'Potentially a Security'
        else:
            classification = 'Likely NOT a Security'
        
        return {
            'token_name': self.token_name,
            'total_score': total_score,
            'percentage': percentage,
            'classification': classification,
            'details': self.prongs
        }

# Simulate assessment for different tokens
test_results = []

# Token 1: Bitcoin
assessment = HoweyTest("Bitcoin")
print("\nAssessing Bitcoin...")
assessment.assess_prong('investment_of_money', 1)
assessment.assess_prong('common_enterprise', 0)
assessment.assess_prong('expectation_of_profits', 1)
assessment.assess_prong('efforts_of_others', 0)
result = assessment.get_result()
test_results.append(result)
print(f"  Classification: {result['classification']}")

# Token 2: Typical ICO Token (Security)
assessment = HoweyTest("ICOToken")
print("\nAssessing ICO Token...")
assessment.assess_prong('investment_of_money', 2)
assessment.assess_prong('common_enterprise', 2)
assessment.assess_prong('expectation_of_profits', 2)
assessment.assess_prong('efforts_of_others', 2)
result = assessment.get_result()
test_results.append(result)
print(f"  Classification: {result['classification']}")

# Token 3: Utility Token (Borderline)
assessment = HoweyTest("UtilityToken")
print("\nAssessing Utility Token...")
assessment.assess_prong('investment_of_money', 2)
assessment.assess_prong('common_enterprise', 1)
assessment.assess_prong('expectation_of_profits', 1)
assessment.assess_prong('efforts_of_others', 0)
result = assessment.get_result()
test_results.append(result)
print(f"  Classification: {result['classification']}")

# Token 4: Pure Governance Token
assessment = HoweyTest("GovernanceToken")
print("\nAssessing Governance Token...")
assessment.assess_prong('investment_of_money', 2)
assessment.assess_prong('common_enterprise', 0)
assessment.assess_prong('expectation_of_profits', 0)
assessment.assess_prong('efforts_of_others', 0)
result = assessment.get_result()
test_results.append(result)
print(f"  Classification: {result['classification']}")

# ----------------------------------------------------------------
# PART B: TOKEN CLASSIFICATION COMPARISON
# ----------------------------------------------------------------

print("\n" + "-"*60)
print("PART B: Token Classification by Jurisdiction")
print("-"*60)

classification_data = {
    'Jurisdiction': ['US (SEC)', 'EU (MiCA)', 'UK (FCA)', 'Singapore (MAS)'],
    'Security Token': ['Securities', 'MiCA excluded, existing laws', 'Securities', 'Securities'],
    'Utility Token': ['May be security', 'Regulated under MiCA', 'Unregulated', 'Unregulated'],
    'Payment Token': ['Unregulated (CFTC)', 'Regulated under MiCA', 'Regulated (e-money)', 'Regulated (PSA)'],
    'Stablecoin': ['Regulated', 'EMTs/ARTs', 'Regulated', 'Regulated'],
    'DeFi Token': ['Enforcement', 'Under review', 'Under review', 'Monitoring']
}

classification_df = pd.DataFrame(classification_data)
print(classification_df.to_string(index=False))

# ----------------------------------------------------------------
# PART C: SECURITIES EXEMPTIONS
# ----------------------------------------------------------------

print("\n" + "-"*60)
print("PART C: Securities Exemptions")
print("-"*60)

exemptions_data = {
    'Exemption': ['Reg D (506)', 'Reg A+', 'Reg S', 'Reg CF'],
    'Target Investors': ['Accredited only', 'Retail + Accredited', 'Offshore only', 'Retail'],
    'Max Raise': ['Unlimited', '$75M', 'Unlimited', '$5M'],
    'Filing Requirements': ['Form D', 'Form 1-A', 'None (offshore)', 'Form C'],
    'Time to Market': ['Fast', 'Medium', 'Fast', 'Medium']
}

exemptions_df = pd.DataFrame(exemptions_data)
print(exemptions_df.to_string(index=False))

# ----------------------------------------------------------------
# PART D: REGULATORY ENFORCEMENT TRENDS
# -----------------------------------------------------------------

print("\n" + "-"*60)
print("PART D: Regulatory Enforcement Trends")
print("-"*60)

enforcement_data = {
    'Year': ['2021', '2022', '2023', '2024'],
    'SEC Actions': [18, 32, 45, 50],
    'Fines (Millions)': [85, 120, 300, 150],
    'DeFi Cases': [1, 3, 8, 12],
    'Exchange Cases': [2, 4, 6, 8]
}

enforcement_df = pd.DataFrame(enforcement_data)
print(enforcement_df.to_string(index=False))

# Visualise
fig, ax = plt.subplots(figsize=(12, 5))
x = np.arange(len(enforcement_data['Year']))
width = 0.2

ax.bar(x - width*1.5, enforcement_data['SEC Actions'], width, label='SEC Actions', color='blue', alpha=0.7)
ax.bar(x - width*0.5, [f/10 for f in enforcement_data['Fines (Millions)']], width, label='Fines/10 (Millions)', color='red', alpha=0.7)
ax.bar(x + width*0.5, enforcement_data['DeFi Cases'], width, label='DeFi Cases', color='green', alpha=0.7)
ax.bar(x + width*1.5, enforcement_data['Exchange Cases'], width, label='Exchange Cases', color='orange', alpha=0.7)

ax.set_xlabel('Year')
ax.set_ylabel('Number')
ax.set_title('Regulatory Enforcement Trends')
ax.set_xticks(x)
ax.set_xticklabels(enforcement_data['Year'])
ax.legend()
ax.grid(True, alpha=0.3)

plt.tight_layout()
plt.savefig('enforcement_trends.png', dpi=300, bbox_inches='tight')
plt.show()
print("Enforcement trends chart saved as 'enforcement_trends.png'")

# ----------------------------------------------------------------
# PART E: TOKEN CLASSIFICATION DECISION FRAMEWORK
# -----------------------------------------------------------------

print("\n" + "-"*60)
print("PART E: Token Classification Decision Framework")
print("-"*60)

decision_framework = {
    "Step 1: Purpose of Token": {
        "Questions": [
            "Is the token used as a medium of exchange?",
            "Does the token provide access to a service?",
            "Does the token represent ownership or debt?"
        ],
        "Classifications": ["Payment", "Utility", "Security"]
    },
    "Step 2: Howey Test Assessment": {
        "Questions": [
            "Was there an investment of money?",
            "Is there a common enterprise?",
            "Is there an expectation of profits?",
            "Are profits from the efforts of others?"
        ],
        "If All Yes": "Likely a Security Token"
    },
    "Step 3: Jurisdictional Analysis": {
        "Questions": [
            "Which jurisdictions will the token be offered in?",
            "What are the regulatory requirements in each?",
            "What exemptions are available?"
        ],
        "Actions": ["Comply with local laws", "Consider exemptions", "Engage legal counsel"]
    },
    "Step 4: Risk Assessment": {
        "Questions": [
            "What is the risk of SEC enforcement?",
            "What is the risk of investor litigation?",
            "What is the reputational risk?"
        ],
        "Actions": ["Mitigate risks", "Consider legal opinions", "Implement compliance"]
    }
}

for step, details in decision_framework.items():
    print(f"\n{step.upper()}:")
    for key, value in details.items():
        if isinstance(value, list):
            print(f"  {key}:")
            for item in value:
                print(f"    • {item}")
        else:
            print(f"  {key}: {value}")

# ----------------------------------------------------------------
# PART F: SUMMARY AND RECOMMENDATIONS
# -----------------------------------------------------------------

print("\n" + "="*70)
print("PART F: Summary and Recommendations")
print("="*70)

print("""
Securities Laws and Token Classification – Key Takeaways:

1. The Howey Test determines if a token is a security: investment of money, common enterprise, expectation of profits, efforts of others.
2. Token types: payment, security, utility, asset-backed, hybrid.
3. Jurisdictional frameworks vary (US: Howey, EU: MiCA, UK: FCA, Singapore: PSA).
4. Security tokens are subject to securities laws (registration, disclosure, reporting).
5. Exemptions: Reg D (accredited), Reg A+ (retail), Reg S (offshore), Reg CF (crowdfunding).
6. Misclassification risks: enforcement actions, rescission rights, legal liability.
7. Key cases: SEC v. Ripple, SEC v. LBRY, SEC v. Telegram.

Recommendations:
  - Conduct a Howey Test analysis for any token offering.
  - Seek legal counsel on token classification.
  - Consider exemptions if token is a security.
  - Build compliance into token design.
  - Disclose risks transparently.
  - Monitor regulatory developments.
  - Consider decentralisation to avoid security classification.
""")