Analyst Alex Krüger claims that most tokens have failed by design due to outdated rules. According to Krüger, current cryptocurrency regulation forces projects to launch assets without enforceable rights to avoid being classified as securities, which has caused over 13.4 million tokens to “die” since 2021.
This phenomenon, which reached a critical point in 2025, shows that 53.2% of listed cryptocurrencies have failed miserably. When analyzing the figures, it is observed that eleven million tokens collapsed last year alone, representing the vast majority of recorded failures, evidencing an unprecedented acceleration in the mortality of these digital assets today.
The impact of the Howey Test on digital asset design
On the other hand, the SEC’s application of the Howey Test has pushed teams to strip tokens of any contractual rights. In this way, to avoid being considered investment contracts, developers create assets that lack real utility and ownership rights, fostering an ecosystem defined by pure speculation and a total lack of institutional accountability throughout the entire sector.
Likewise, this legal structure creates an accountability vacuum where founders have no fiduciary duties toward investors. Therefore, teams can control large treasuries or abandon projects without facing legal consequences, which Krüger calls a design oriented toward “soft rugs,” harming the trust of retail participants searching for projects with solid fundamentals and operational transparency within the digital finance space.
In addition, the analyst argues that in any other financial market, a project with total opacity would not raise a dime. Nonetheless, in the crypto sector, this has been the only apparent compliance path, resulting in a decade of tokens designed to fail while blockchain technology tries to find a regulatory framework that allows the issuance of assets with real rights.
Why is the rise of meme coins a response to the regulatory vacuum?
On the other hand, retail traders, disillusioned by VC-backed utility tokens, have migrated toward meme coins. Because these offer a transparent lack of utility, investors prefer to bet on direct speculative assets, which has intensified predatory trading and zero-sum gambling within the most popular exchanges currently operating in the global market.
However, this trend has only worsened the state of the market by increasing opacity and extreme volatility. As long as cryptocurrency regulation does not evolve, the sector will remain trapped in a cycle of failed launches, where speculation replaces true financial innovation, driving away investors who seek legal certainty and assets with verifiable economic backing on the network.
It is also relevant to highlight that sectors such as music and video tokens have experienced failure rates close to seventy-five percent. Lacking a framework that allows for profit distribution or authorship rights, these projects quickly become economically unfeasible, demonstrating that current regulations stifle legitimate business models attempting to use digital assets creatively for diverse industries.
Finally, Krüger maintains that the solution lies in a new generation of tokens governed by clearer and more modern laws. It is expected that a comprehensive reform will allow for the emergence of assets with strong fundamentals, ending the era of worthless tokens, and projecting a future where the industry can flourish under a structure that protects the investor without hindering necessary technological development.
