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Every crypto project faces the same fundamental problem: Achieving decentralization is critical to avoid regulatory scrutiny, but until a project launches its token, a degree of centralization is unavoidable.
The SEC’s outdated Howey test ensures that nearly every legitimate crypto project gets classified as a security. The logic is self-defeating. Projects can’t decentralize without launching a token, but launching a token in the US instantly puts them in the SEC’s crosshairs.
This isn’t just a theoretical issue; it has real consequences. Liquidity providers, essential for all new token launches, won’t engage with US-based projects because they assume their tokens will be classified as securities. Centralized exchanges refuse to list tokens issued from US entities for the same reason. Even decentralized exchanges face pressure from their legal teams to avoid actively seeding liquidity for American projects. The result? US founders are boxed out of the global crypto economy before they even get started.