January 25th, 2026

The US Wants Crypto Innovation: So Why Is It Still Regulating with an Orange-Era Test?

The Howey test struggles to classify decentralized crypto networks and modern token designs.
Functional token utility should matter more than speculative trading expectations.

The United States financial regulatory landscape stands at a critical juncture. With the recent passage of key stablecoin legislation, the GENIUS Act in July 2025, and the ongoing, highly anticipated debate over comprehensive market structure bills like the CLARITY Act in early 2026, the nation is opening up to the crypto economy.

This momentum, coupled with a discernible shift in administrative posture from enforcement-heavy to innovation-friendly, signals a new era for digital assets.

Why the Howey Test No Longer Fits Crypto

The cornerstone of U.S. securities law, the 1946 Howey test, remains an anachronistic and ill-suited tool for the nuances of a rapidly evolving, often decentralized technological paradigm.

It is my firm opinion that relying solely on this decades-old precedent for a modern, multi-trillion-dollar global market is a fool’s errand that stifles innovation while failing to provide genuine investor protection. A new, crypto-centric framework is not just a regulatory desire; it is an economic necessity.

An Orange Grove Test Meets Decentralized Finance

The original Howey test, born from a dispute over orange groves in Florida, determines a security if there is an investment of money in a common enterprise with a reasonable expectation of profits derived solely from the efforts of others.

This framework, while flexible in its time, struggles to capture the essence of decentralized finance (DeFi), where the efforts of others are often distributed among countless, sometimes anonymous, participants, governed by immutable code rather than a central corporation.

The Securities and Exchange Commission (SEC) has attempted to modernize its application, most notably with 2025 guidance emphasizing the expectation of profit and issuer influence criteria. This still leaves a gaping chasm of uncertainty, particularly for projects aiming for true decentralization.

Legal Uncertainty and the Cost to Institutional Adoption

The current approach fosters an environment where an asset may be considered a security at launch but a commodity later. This legal gray area is what most institutional investors fear to tread, thus hindering mainstream adoption and keeping the U.S. from cementing its crypto capital status.

We need a bespoke instrument, a DeFi Howey, that provides the clear token taxonomy that regulators and builders alike desperately need. This new test must be built on the reality of distributed ledger technology (DLT), not shoehorned into an outdated agricultural precedent.

Toward a Crypto-Centric Regulatory Framework

Drawing on proposals such as Commissioner Hester Peirce’s safe harbor and the functional token taxonomy advanced by industry leaders, I propose a crypto-centric regulatory framework built around four core rules. The goal is to promote U.S. innovation while preserving investor protection.

Rule One: The Decentralization Threshold

A modern framework must establish a clear, verifiable standard for decentralization. Once a network or protocol meets this threshold, it should exit securities law oversight and fall under a commodity framework, likely overseen by the Commodity Futures Trading Commission (CFTC).

Rather than relying on vague claims of “no central party,” regulators should assess measurable factors such as token ownership dispersion, the number of independent validators, and the immutability of smart contracts.

For example, if no single entity, including the founding team, controls more than a defined share—such as 20%—of governance tokens or validation power, the project would qualify. This provides a predictable path from launch to decentralization, addressing one of the industry’s most persistent legal uncertainties.

Rule Two: Functional Utility Versus Speculative Intent

The framework should prioritize a token’s actual use within a live network over speculative expectations. Tokens that serve clear, consumptive purposes—such as paying network fees, accessing services, or participating in on-chain governance—should be treated differently from passive investment instruments.

This functional approach better reflects how crypto networks operate and reduces the risk of utility tokens being swept into securities litigation solely due to secondary-market trading behavior.

Rule Three: Transparency and On-Chain Disclosure

Investor protection should be achieved through standardized, on-chain disclosures rather than traditional prospectuses. Projects should provide machine-readable information on audits, token supply and distribution, governance structures, and material risks.

This “code is law, disclosure is compliance” model aligns with the transparency of public blockchains and builds on disclosure principles embedded in the CLARITY Act.

Rule Four: Intermediary Liability and Consumer Safeguards

Regulation should focus on centralized intermediaries where most retail users interact. The GENIUS Act sets a useful precedent through reserve requirements and AML obligations. Strong oversight of exchanges and service providers can protect consumers without constraining decentralized innovation.

A Narrow Window to Get Crypto Regulation Right

The U.S. is at a pivotal moment. The current legislative momentum offers a rare chance to get this right. By moving beyond the archaic limitations of the Howey test and embracing a bespoke, forward-thinking framework, we can provide the regulatory clarity the market craves, protect investors, and ensure America remains a global leader in the digital financial revolution.

Sticking to the old ways in a new world is a path to irrelevance, and that is a price the U.S. economy cannot afford to pay.

Source: https://www.financemagnates.com/cryptocurrency/the-us-wants-crypto-innovation-so-why-is-it-still-regulating-with-an-orange-era-test/

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

j j j

January 23rd, 2026

Crypto in the danger zone: Technical weakness, low volume, and a critical support test

January 22 delivered a compelling narrative of a global financial landscape in flux, where traditional equities soared on the wings of diplomatic optimism while the volatile realm of digital assets cooled significantly. The day was marked by a second consecutive session of gains for major US stock indices, a direct consequence of easing geopolitical tensions and a corresponding retreat of the US dollar. This confluence of factors painted a complex picture for investors everywhere, highlighting a clear rotation of capital back into regional markets and safe-haven commodities.

My view is that these events highlight a fragile market sentiment, heavily influenced by headline news and the immediate unwinding of risk positions. The market’s sharp positive reaction to President Trump’s reported “framework” deal over Greenland, which ostensibly cooled global tensions and averted a looming trade war with new European tariffs, reveals a nervous system quick to price in relief. This optimism was evident in the performance of the S&P 500, which advanced 0.55 per cent to close at 6,913.35, the Dow Jones Industrial Average, which rose 0.63 per cent (306.78 points) to 49,384.01, and the Nasdaq Composite, which gained 0.91 per cent to settle at 23,436.02. This movement was not without specific stock stories, as tech giants such as Nvidia, Microsoft, and Meta Platforms all ended higher, and Intel shares rose slightly ahead of their quarterly results. Conversely, Abbott Laboratories shares fell sharply, reminding us that company-specific fundamentals, such as the impact of higher prices on sales growth, always matter, even amid broader market rallies.

The easing of global tensions also had a palpable effect on commodities and currencies. The US dollar index was 0.5 per cent lower at 98.30, marking its biggest single-day fall in a month. This decline acted as a potent catalyst for gold, the traditional safe-haven metal, which soared to an all-time high, climbing above US$4,960 an ounce in the spot market. It is a classic market reaction: a weakening dollar and reduced global risk perception often see a surge in the appeal of the yellow metal. Concurrently, WTI crude futures fell below US$60 a barrel, declining more than two per cent to US$59.35, as the geopolitical risk premium that often elevates oil prices evaporated with news of the diplomatic breakthrough. The bond market remained relatively stable throughout, with the 10-year Treasury yield at approximately 4.25 per cent, little changed from the previous day’s close.

However, a different, more cautious mood permeated the digital asset ecosystem. While traditional assets rallied, the crypto market fell 0.64 per cent over the last 24 hours, extending a seven-day decline of 6.5 per cent. This divergence suggests a distinct risk-off environment within the crypto space, driven by specific structural concerns rather than immediate global headlines. My take is that the crypto market is currently grappling with a crisis of conviction, primarily stemming from large institutional players. The data is clear: spot Bitcoin ETFs recorded US$1.58 billion in net outflows this week, a powerful signal of institutional profit taking and reduced exposure. This consistent selling pressure is outweighing retail buying, creating a market that lacks a necessary institutional bid to support prices.

The lack of institutional support is compounded by a significant plunge in trading activity. Total 24-hour trading volume fell 32.8 per cent to US$98.43 billion, with derivatives volume down 37 per cent. This sharp drop indicates low trader conviction and reduced liquidity, making prices prone to slippage even on modest sell orders. In thin markets, downward moves are often amplified. Technically, the market is testing a critical support level at the 78.6 per cent Fibonacci retracement level of US$3.01 trillion global market cap. The RSI sits at 43.74, neutral but weak. The conclusion I draw is that this is not a broad market panic but a targeted period of consolidation rooted in institutional caution and evaporating volumes.

For holders, the immediate future hinges on whether these ETF outflows persist and if that crucial US$3.01 trillion support level can hold firm over the next 48 hours. The contrasting performance of traditional and digital markets on this day provides a fascinating study of how different asset classes react to unique combinations of macro and microeconomic pressures.

Source: https://e27.co/crypto-in-the-danger-zone-technical-weakness-low-volume-and-a-critical-support-test-20260123/

Anndy Lian

www.anndy.com

j j j

December 18th, 2025

Tech earnings fail AI test and crypto pays the price

Asian equity markets began the session on a sombre note, weighed down by a broad-based retreat in technology stocks, a sector that has powered regional gains throughout much of the year. The sell-off reflects growing investor unease over the sustainability of artificial intelligence-driven valuations, especially as major US tech firms like Oracle and Broadcom delivered earnings outlooks that failed to meet elevated expectations.

The ripple effects from Wall Street’s Nasdaq, which dropped 1.81 per cent, have now reached Tokyo, Hong Kong, and Seoul, reinforcing the increasingly tight correlation between global tech sentiment and risk-on assets like cryptocurrencies.

Japan’s Nikkei 225 opened at 49,004.9 points, marking a decline of over one per cent from its prior close of 49,512.28. The losses were led by heavyweight tech and semiconductor-related names, with SoftBank Group plunging 7.25 per cent on concerns that its aggressive AI and venture bets may not deliver near-term returns.

In Hong Kong, the Hang Seng Index hovered around 25,405.63 points, slightly lower for the day, but the real pain came from its technology sub-index, which slid sharply as mainland and overseas investors rotated out of growth-oriented equities. Meanwhile, mainland China’s Shanghai Composite bucked the trend slightly, trading at 3,874.3586 points with a modest gain, though it too experienced earlier-week volatility as Beijing’s mixed signals on fiscal stimulus and tech regulation created uncertainty.

At the heart of this market-wide caution lies a fundamental reassessment of AI-driven capital allocation. For over two years, tech companies across Asia, from South Korea’s Samsung and SK Hynix to Taiwan’s TSMC, have poured billions into AI infrastructure, data centres, and next-generation chip development. These investments lifted stock prices to record highs, supported by narratives of an AI revolution that would reshape global productivity.

Today’s market action suggests investors are demanding more than vision; they want measurable returns. With forward earnings revisions turning negative for several key players, the market is pricing in a potential gap between ambition and profitability.

This shift in sentiment has spilled directly into the cryptocurrency market, which fell 1.64 per cent in the last 24 hours, extending a 7.17 per cent weekly decline. The linkage is no longer coincidental; it is structural. Over the past 18 months, institutional capital has increasingly treated large-cap crypto assets, particularly Bitcoin, as a satellite to the Nasdaq, especially during macro regimes dominated by liquidity expectations and risk appetite.

The 24-hour correlation between Bitcoin and the Nasdaq-100 now stands at plus 0.89, meaning the two move in near lockstep. When US tech falters, crypto follows, and today’s Nasdaq weakness is fuelled by AI scepticism, which is transmitted directly into digital asset markets.

Compounding the pressure was a significant liquidation cascade in crypto derivatives markets. In just 24 hours, Bitcoin saw US$153 million in liquidations, a 148 per cent increase from the prior day, with short positions accounting for US$79.5 million of that total. Such aggressive unwinding of leveraged positions typically occurs when prices breach key technical levels, triggering stop-losses and margin calls in a self-reinforcing spiral.

With total open interest across crypto derivatives at US$776 billion, the ecosystem remains highly sensitive to volatility shocks. The 7-day Relative Strength Index for Bitcoin has plunged to 15.4, signalling extreme oversold conditions, a level that historically precedes short-term bounces. Without a catalyst, oversold does not automatically mean reversal.

Further undermining confidence is the curious paradox surrounding XRP. Despite the recent launch of an XRP exchange-traded fund that has drawn US$1 billion in inflows since November, the token itself trades 47 per cent below its all-time high. This disconnect between institutional adoption and price performance has sown doubt among retail traders and algorithmic strategies alike.

If a regulated ETF with billion-dollar backing cannot reignite momentum in a top-five asset, the broader altcoin market may lack the firepower for a meaningful recovery. As a result, Bitcoin dominance has climbed to 59.2 per cent, reflecting a flight to relative safety within an already volatile asset class.

Crypto’s traditional role as a hedge has also diminished. Its 24-hour correlation with gold has turned negative at minus 0.35, indicating that in the current environment, it behaves not as a store of value but as a high-beta tech proxy. This shift matters because it means that during macro stress, such as uncertainty around central bank policy, crypto no longer offers diversification benefits. Instead, it amplifies risk. Traders now view it through the same lens as semiconductor stocks or cloud software equities, a leveraged bet on future innovation with limited near-term cash flows.

Looking ahead, all eyes in Asia will turn to the Bank of Japan’s policy decision later today. While Japan has maintained ultra-loose monetary policy longer than any other major economy, recent inflation data and yen weakness have sparked speculation that a rate hike, however modest, could be on the table. Such a move would tighten financial conditions in the region, further pressuring high-duration assets like tech stocks and crypto. Even the mere acknowledgement of a policy shift could trigger another leg down in risk markets.

In this context, the path for Bitcoin and Asian tech hinges less on fundamentals and more on macro liquidity. The market is no longer rewarding vision alone. It requires evidence that AI investments will translate into earnings, that crypto ETFs will drive sustainable demand, and that central banks will not abruptly withdraw the punchbowl. Until those questions are answered, volatility will persist, and the correlation between the Nasdaq and crypto will remain a dominant force shaping price action.

The current oversold RSI reading may hint at a tactical bounce, but without a shift in narrative or policy, any relief rally could prove fleeting. The era of unquestioning faith in AI-driven growth appears to be giving way to a more discerning, earnings-focused regime, one that will separate speculative narratives from enduring value.

Source: https://e27.co/tech-earnings-fail-ai-test-and-crypto-pays-the-price-20251218/