Breaking Down the SEC's Landmark Crypto Framework

The U.S. Securities and Exchange Commission's April 2025 guidance represents the most significant regulatory clarification for digital assets since the 1946 Howey test. By introducing a three-pronged evaluation system — examining initial sales context, ongoing utility, and issuer control — the SEC has created measurable criteria that could reshape how 【$2.3 trillion】 crypto markets operate.

When Does a Token Become a Security?

——The profit expectation factor becomes the make-or-break criterion—— under the new rules. Tokens marketed with ROI promises or tied to centralized teams now face near-certain securities classification. This captures:

• Pre-mined tokens with vesting schedules
• Governance tokens offering revenue shares
• ICOs using price appreciation as selling points

Legal precedents like the 2023 LBRY case demonstrate how even decentralized-looking projects can fall under securities laws if founders retain substantial control.

The Safe Harbor for Functional Tokens

Ethereum's post-Merge status provides the clearest example of non-security tokens. The SEC explicitly excludes:

• Layer-1 gas tokens (ETH, SOL, AVAX)
• Fully-backed stablecoins
• NFTs with no profit-sharing features

Interestingly, the guidance acknowledges that decentralization maturity matters — tokens initially centralized may later escape securities classification if they achieve genuine community control.

Why Crypto Exchanges Face Compliance Whiplash

The rules force trading platforms into difficult choices:

【78%】 of surveyed exchanges report needing enhanced legal review processes
【42%】 anticipate delisting certain assets

——This isn't just about labeling—it's about survival—— notes a Coinbase compliance officer. Platforms must now implement continuous monitoring as tokens may shift categories during their lifecycle.

The EU Contrast: MiCA's Blueprint Approach

Unlike the SEC's case-by-case method, Europe's Markets in Crypto-Assets regulation:

• Pre-defines 3 token categories
• Sets explicit licensing requirements
• Focuses on consumer protection over securities tests

This structural difference means a token could be regulated as a utility asset in Frankfurt while being treated as a security in New York.

Industry Pushback and Unresolved Questions

Critics highlight three persistent gray areas:

1. DeFi governance tokens with indirect profit mechanisms
2. DAOs that resemble corporate structures
3. Airdrops that might constitute unregistered offerings

SEC Commissioner Peirce's public dissent underscores the ongoing debate about whether enforcement-first regulation stifles blockchain innovation in America.

What Comes Next for Crypto Projects?

The guidance effectively creates a compliance roadmap:

• New tokens must design against Howey criteria from day one
• Existing projects need decentralization audits
• All issuers should prepare disclosure documentation

As the rules take effect, their real-world application — particularly around staking rewards and DAO treasuries — will shape the next generation of blockchain architectures.