How Does the Term “Speculative” Relate to the Expectation of Profit?

"Speculative" refers to the high-risk nature of an investment made with the hope of a significant profit. In the context of the Howey Test, a speculative investment strongly aligns with the "expectation of profit" prong.

The fact that a token is highly speculative, with returns dependent on the managerial efforts of the promoter, is often cited by regulators as evidence that the token is being sold as an investment contract. The focus is on the investor's motivation for the high-risk return.