What Is the Legal Basis for Arguing That a Token Delivered on a Functional Network Is Not a Security?

The legal basis for arguing that a token delivered on a functional network is not a security rests on the failure of the fourth prong of the Howey Test: the expectation of profit derived solely from the efforts of others. Once the network is fully operational and decentralized, the argument is that the token's value is driven by the network's consumptive use and the efforts of a broad, independent community, not a central promoter.

Therefore, the economic reality has shifted, and the token is a consumable product rather than a passive investment in a common enterprise.