How Does the “Expectation of Profit” Prong Apply to Pre-Functional Tokens?

If a token is sold before the underlying platform or service is operational (pre-functional), investors are primarily relying on the efforts of the development team to create value, which strongly suggests an expectation of profit. Regulators often view this as a key indicator of a security.

Once the platform is fully functional, the token's value may shift to its utility, potentially changing its classification.