This is a good point. I’ve heard a lot of lawyers share a similar belief. But there’s also the question of whether most or many or approaching all people buy the token as an investing expecting profit rather than to use it for its primary purpose. The key example is ETH, whose primary purpose of use as gas in txs/smart contracts and can be used for that purpose already. But I would bet a few wei that most people who hold it don’t use it for that purpose or even know that’s what it’s for. So is it a security if it technically has a practical use but most people view it with all the factors of the Howey test?
But my question is trying to fit crypto into old law really the best goal? Ethereum itself was a pre-development ICO, and I tend to believe that it demonstrated how different ICO is from the traditional securities fundraising route. Do we want to stop those types of risky investments for amazing (but risky) projects like ethereum that would be impossible under the old system given that they often do not expect revenue and need funding just to get an alpha together? Or should we be re-thinking the goals of securities law (namely to prevent fraud and unfair dealing by requiring disclosure to investors intelligent enough to use it) and coming up with a whole new scheme for ICO? I think other countries are taking this approach, so I’d hate to see US lag because they’re tied to stare decisis and lobbied by overzealous regulatory bodies.
