Does a Functional Network Guarantee a Token Is Not a Security?

No, a functional network does not guarantee a token is not a security. While the existence of a functional network and high consumptive use significantly weakens the "expectation of profits from the efforts of others" prong of the Howey Test, other factors still apply.

If the token's value is still heavily marketed as an investment opportunity, or if the token confers rights akin to equity (e.g. dividends or profit-sharing from the promoter's efforts), it may still be classified as a security. The SEC applies a "substance over form" analysis to the economic reality.