When the Howey test is no longer abused, innovation may finally be able to take root in the United States.
In November 2025, Paul S. Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), delivered a historic speech: for the first time, he explicitly proposed establishing a "four-category regulatory system for tokens" and emphasized that this would end the "one-size-fits-all" regulatory approach of the past decade. More importantly, he reinterpreted the Howey Test, which has been cited in countless regulatory actions, and clearly pointed out:
“Investment contracts can be terminated, and tokens will not remain securities forever just because they were once securities.”
what does that mean?
This means that the fundamental logic behind US regulation of crypto assets is undergoing a structural change.
This means that for the first time, the United States has acknowledged that assets on the blockchain are not the same thing and should not be uniformly included under securities laws.
This means that the SEC will begin to establish a legitimate trading market for non-security tokens, rather than simply declaring that "all of them are securities and therefore must be listed on securities platforms."
This represents the biggest institutional change of the past decade for the entire crypto industry, startups, exchanges, investment firms, DeFi developers, and even the market competitiveness of the United States.
This article will analyze this event in depth from four parts:
Why is the "one-size-fits-all" regulatory approach no longer viable?
The core of the SEC's new framework: four types of tokens + Howey's new interpretation
A fundamental shift in regulatory logic: Investment contracts ≠ the assets themselves.
Impact on the industry: A reshuffling of the US crypto industry chain
01
Why is "one-size-fits-all regulation" no longer sustainable?
Over the past decade, the regulatory predicament of cryptocurrencies in the United States has stemmed primarily from a flawed premise:
Regulators treat "tokens" as a unified asset class.
But the identity of a token can be:
Payment currencies (BTC, SOL, etc.)
Game Tickets (GameFi, RWA)
Network resources (Gas)
NFT (Collectibles)
Tickets/Membership (Social Networks, On-Chain Identity)
Real asset mapping (tokenized bonds, government bonds)
Governance assets of fully decentralized protocols
But regulators have always lumped them together, believing that "they could all be securities."
This leads to three serious problems:
(1) The regulatory uncertainty is extremely high.
The startup team didn't know:
How to issue tokens?
Under what conditions will a token be considered a security?
Once the network matures, will tokens be able to "shed their security attributes"?
American entrepreneurs prefer to launch in Singapore, Dubai, or Europe rather than take the risk in the United States.
Direct consequence: The United States missed out on a large number of innovative web3 companies, projects, and talents.
(2) Trading platforms are forced into a gray area
If all tokens are securities:
Coinbase does not have a securities license.
CEXs do not offer trading for most tokens.
DeFi is also incompatible with securities laws (no custody, no intermediaries).
The U.S. regulatory system itself cannot accommodate a world where "all tokens are considered securities".
(3) The Howey test was misweaponized
The Howey test was originally used to determine whether the structure of an "investment contract" is subject to securities laws.
The mistakes of the past were:
The term "token of an investment contract" can be understood as "the token itself is a security".
This completely deviates from the spirit of case law and leads to confusion in regulatory logic.
The SEC chairman's latest remarks are a direct response to this chaotic situation:
It acknowledges that the assumption that “crypto = security” has been wrong over the past decade.
02
The core of the SEC's new framework: clear classification of four token categories + Howey's new interpretation
In his speech, the chairman clearly stated:
In the coming months, the SEC will consider adopting a new token classification system.
This is the first time the United States has legally recognized:
Different types of tokens require different regulatory approaches.
The four types of tokens are as follows.
**(a) Digital Commodities / Network Tokens**
→ Not a security**
Features:
Based on decentralized network
Complete functionality
Value comes from the operation of the protocol itself, not from the team's efforts.
Typical example:
BTC (Absolutely Decentralized)
ETH (a mature network)
SOL, ATOM, AVAX (some cases may apply)
L1 and L2 native gas tokens
This means:
The native tokens of mainstream public blockchains will be explicitly classified as non-security assets in the future.
This is one of the biggest regulatory developments in a decade.
**(ii) Digital collectibles (NFTs, etc.)**
→ Not a security**
Representative objects include:
Art/Music/Video
In-game assets
Collectibles and Memes
Digital cultural symbols
The SEC's logic is clear:
The value of NFTs does not come from "the efforts of others", but from the creation itself.
Therefore, it should not be regulated as a securities firm.
**(III) Digital Utilities**
→ Not a securities**
include:
On-chain members
Tickets
Identity Certificate
Certificate of Ownership
Usage rights tokens (game passes, on-chain credentials)
These tokens are more like “digital keys” than investment tools.
**(iv) Tokenized Securities**
→ Belongs to securities**
For example:
Tokenized bonds (T-Bills Token)
Tokenized Stock (TSLA Token)
Tokenization Fund
Tokenized Treasury Bonds
The SEC's stance is:
"Securities do not cease to be securities simply because they are put on the blockchain."
The logic is stable and reasonable.
**(V) A New Interpretation of the Howey Test (Major News)**
→ "Investment contracts can be terminated"**
This part is the most revolutionary part of the entire speech.
The SEC clarified for the first time:
Your issuance of tokens may constitute an investment contract (securities offering).
However, once the network matures, this investment contract will end, and the token will no longer be considered a security.
This has a completely disruptive impact on the regulatory approach of former SEC Chairman Gary Gensler.
Past logic:
Tokens were once like securities when they were sold → they will always be securities.
Current logic:
An investment contract is a relationship, not a permanent labeling of a token.
Once the relationship is terminated, the token is no longer a security.
This is a fundamental transformation.
03
A true shift in regulatory logic: from "labeling regulation" to "economic substance regulation".
The Chairman repeatedly emphasized in his speech:
Regulation focuses on the economic substance, not the name, form, or technology.
In the past, some projects attempted to pass:
The tokens are called "user points".
It's called a "governance token".
It's called "NFT"
It's called a "membership card".
It's called an "on-chain certificate".
To circumvent securities laws.
The SEC's position is very clear:
The name doesn't matter, what matters is:
Is there an expectation of relying on others to work for profit?
Is there a consistent core team responsible for driving the project?
Do buyers rely on the issuer to fulfill its promises?
in other words:
Early-stage financing for a project → falls under the category of securities issuance.
Once the network matures and becomes decentralized, the securities relationship ends.
Subsequent token secondary market trading → managed as commodity or utility tokens
This is the regulatory approach that truly aligns with the development of blockchain technology.
04
Impact on the crypto industry: A real shift in the US regulatory landscape is coming.
This speech is not a "policy analysis show," but a very substantial signal that will have the following five major impacts.
(1) The United States will no longer regard mainstream public blockchains as "securities black holes".
All L1, L2, and DeFi projects will have a clearer compliance path in the future.
For the public blockchain ecosystem:
Easier to enter the US market
It is easier to cooperate with compliance agencies
Exchanges can be more confident in listing their products.
This will significantly increase the size of the US on-chain economy.
(2) The compliance model of exchanges will undergo structural reshaping.
In the future, US exchanges may be divided into three categories:
Types of Jurisdiction: Securities Exchanges (SEC): SEC Tokenized Securities (tokenized stocks/bonds, etc.) Commodity Exchanges (CFTC): CFTC BTC, ETH, L1 Tokens, Mature Decentralized Tokens State-Level Regulatory Platforms: State Financial Regulatory Authorities Functional Tokens, NFTs, Membership Tokens
This means:
In the future, Coinbase and Kraken may not need to cover all securities regulations, but instead operate in different regions and categories.
(3) Token issuance methods will be more standardized and secure.
The SEC indicated that it may introduce the following in the future:
"Tailor-made issuance system"
include:
Compliant financing rules (similar to Reg A+)
Clear decentralized standards
Clear project maturity conditions
Statutory requirements for termination of investment contracts
This means that the project team can:
compliant token issuance
Compliance Construction
Compliance enters a decentralized phase
Compliant Exit from Securities Relationship
The gray area of "global issuance to circumvent regulations" will be greatly reduced in the past.
(4) The SEC actively guides the United States to regain leadership in crypto innovation.
The Chairman repeatedly emphasized in his speech:
Innovation has flowed out
The United States needs to clarify the rules.
Congress should legislate to establish a market structure
This means:
The United States has realized that its past regulatory practices have made it less competitive.
The essence of this reform is that the United States is attempting to:
Bringing Web3 innovation back to the United States
Implementing on-chain financial systems in the United States
Integrate crypto into the formal financial system, rather than suppress it.
It even implies:
The future US fiscal system also needs to be on-chain (Project Crypto's goal).
(5) In the long run, the on-chain financial system in the United States will take shape.
Tokenized government bonds, tokenized stocks, on-chain payments, on-chain clearing and settlement, on-chain custody...
These infrastructure projects for the next decade will emerge within a clearer regulatory framework.
Ultimately, the United States may achieve:
A super financial market that integrates traditional finance (TradFi) and on-chain finance.
This is Project Crypto's ultimate goal, and the true underlying direction of this speech.
Conclusion: A Historic Window for a Shift in US Regulatory Logic
This speech was not a routine matter, but rather:
The biggest framework reform of crypto regulation in a decade
Howey's test application logic was corrected by the SEC chairman for the first time.
For the first time, regulatory boundaries have been clearly defined.
The statement "Tokens ≠ Securities" was included in a formal speech for the first time.
For the first time, the United States has institutionally encouraged on-chain innovation.
It means:
The United States is prepared to acknowledge the value of the crypto industry.
The United States is preparing to establish a regulatory system that matches the blockchain economy.
The United States is preparing to prevent innovators from fleeing the country.
If the SEC actually passes the relevant rule revisions in the coming months, the United States will transform from a country with the greatest regulatory resistance to one that is most likely to define global standards.
For the entire crypto industry, this is not just a policy change, but a turning point in history.
