Crypto’s token boom is colliding with a hard statistic: since 2021, more than 13.4 million altcoins have “died,” and one analysis says regulation helped set the conditions. Crypto analyst Alex Krüger argues that outdated rules and SEC enforcement built incentives for “worthless by design” assets, because teams feared being labeled securities. He says the SEC’s Howey Test, used to judge whether something is an investment contract, pushed projects into defensive engineering.
To stay “compliant,” issuers systematically removed enforceable rights, leaving buyers with speculation rather than ownership. The report frames the outcome as an accountability gap: when holders have no contractual rights, legal recourse weakens and fiduciary duties fade, even when large treasuries are controlled by founders. In that setting, failure becomes easier to ignore, and the market learns the same lesson repeatedly: price discovery is brutal when the asset has no enforceable claim behind it. It is a sobering scoreboard.
2025 turned token churn into a collapse wave
CoinGecko research quantifies the washout. It says 53.2% of all cryptocurrencies listed on GeckoTerminal had failed by the end of 2025, and that 11.6 million tokens collapsed in 2025 alone, or 86.3% of all failures recorded since 2021. The curve did not just rise, it went vertical in 2025, as listings ballooned from about 428,000 projects in 2021 to 20.2 million by 2025. The annual death count climbed from 2,584 in 2021 to 213,075 in 2022, 245,049 in 2023, and 1.38 million in 2024, before 2025 dwarfed them all. Some niches broke faster: music and video tokens failed at rates close to 75%. This is why enforcement headlines and token mortality are being read together, because the market is generating supply faster than it can sustain demand. Krüger says projects responded by shipping tradeable symbols first and worrying about governance later, which compounded fragility quickly systemwide.
Howey incentives and the rise of rights-free assets
Krüger’s argument is that the Howey framework creates a perverse design loop. The report restates the four prongs: an investment of money, in a common enterprise, with an expectation of profit, based on the efforts of others. To avoid tripping that test, teams stripped tokens of rights, which he says produced assets defined by speculation rather than ownership. He describes an accountability vacuum where founders can control large treasuries or abandon projects with limited consequences, and he calls the era a decade of tokens “designed to soft rug.”
Retail, disillusioned by VC-backed utility tokens, rotated into memecoins that openly offer no utility, a shift he says intensified predatory player-versus-player trading and zero-sum gambling. Another market participant agreed, saying nearly all fungible tokens now look like poor risk-reward and may bleed to zero. Krüger’s proposed fix is clearer regulation that enables tokens with enforceable fundamentals, and even equity-like structures.