April 16, 2026
For years, launching a crypto project in the United States has been a labyrinth of uncertainty. Legal uncertainty and a hostile regulatory environment have forced many founders to seek refuge abroad, helping to turn countries like Switzerland and the Cayman Islands into global centers of blockchain innovation.
With the election of Trump, things finally seemed to change. The US government openly stated its ambition to be crypto-friendly. But despite the fine words, we see little concrete progress so far.
It remains difficult for crypto projects to establish themselves in the US. US regulators remain trapped in vagueness, with threatening words and numerous lawsuits based on “enforcement by regulation.” The ambition to become a global leader in crypto to be, is not transformed into actions that also realize this ambition.
Every crypto business faces the same fundamental problem: decentralization is essential to escape regulation, but during the launch of a token, some centralization is unavoidable.
The outdated Howey test of the SEC makes almost every legitimate crypto project classify as a security. It’s a paradox: projects can’t decentralize without launching a token, but launching one immediately brings them to the attention of the SEC.
And this isn’t a theoretical problem; it has real consequences. Liquidity providers, crucial to any new token launch, don’t want to work with US projects because they think their tokens will be classified as securities. Centralized exchanges refuse to list tokens from US entities out of the same fear. Even decentralized exchanges are being pressured by their legal teams to actively avoid liquidity for US projects. The result? US founders are being shut out of the global crypto economy before they even start.
This regulatory fiasco has led to the rise of an entire industry of offshore legal firms specializing in setting up entities for token issuance. With FINMA’s no-action letter system, Switzerland has become a hotbed for crypto projects, as it offers one of the few structured ways to gain legal clarity on a token’s classification. The Cayman Islands and the British Virgin Islands have also positioned themselves as crypto refugees, with flexible corporate structures that allow projects to operate with far less regulatory risk.
The absurdity is that the real work — development, recruitment, innovation — is still happening in the US. Token issuance is being moved offshore through “Associations” and “Foundations,” which operate independently of US development companies. US founders are forced to pour money into unnecessary legal fees, offshore operators, and sham foundations to avoid the inevitable clampdown by US regulators. This isn’t just bad for crypto; it’s bad for America. Until this problem is fixed, the US will continue to bleed talent, investment, and influence to less short-sighted regions.
The US has struggled with crypto policy for years, and even now, with a government that proclaims itself pro-crypto, real change remains elusive. The solution is not to promise capital gains tax breaks for crypto, as some have suggested. That does little to alleviate the harsh regulatory climate that US projects face. If the US truly wants to lead in crypto, it must also lead in providing legal clarity.
That means finally acknowledging that the same rules that apply to traditional financial markets don’t always apply to crypto. The Howey test doesn’t work. Instead, the government needs to develop a new and functional legal framework for the crypto industry.
It’s time for US lawmakers and regulators to realize that crypto tokens can’t decentralize instantly and almost always require a team of core contributors for initial growth and development. The federal government needs to come up with a version of the Howey test that doesn’t automatically classify every new crypto token as a security, but instead gives tokens a grace period to decentralize. At the same time, the US needs to create new protections to ensure that insiders don’t unfairly profit from crypto projects as they scale.
In addition to quickly ending the “enforcement by regulation” strategy employed under Gary Gensler’s SEC, this appears to be a tactic intended to gradually stifle crypto activity in the US. The government needs to provide clear guidance. Market makers must be able to assess whether US tokens are commodities or securities with some degree of stability and predictability. This is the only way to end the blanket bans that market makers have placed on US tokens and bring crypto development back to America.
Crypto founders aren’t waiting for Washington to figure it out. Every day, without clear regulation, more and more crypto projects are being created offshore. The U.S. doesn’t even have to “embrace” crypto. It just needs to stop actively pushing it away.
If this administration truly wants to make the U.S. the leader in crypto, they need to go beyond campaign talk and fix the fundamental problems that drove the industry overseas in the first place. And moving quickly is essential. Maybe it’s time to take the hat off and show that America can do crypto, too.
Why have many crypto projects moved abroad?
The US's unclear regulatory environment has forced founders to look to countries with more favorable legal environments, such as Switzerland and the Cayman Islands.
What is the role of the Howey test in this story? And who is behind this opinion?
The Howey test makes nearly all legitimate crypto projects classified as securities, placing them under SEC oversight, making decentralization more difficult. Opinion by: Shane Molidor, Founder, Forgd
What's Needed for Change in the US Crypto Landscape?
A new and functional legal framework that takes into account the unique characteristics of crypto, as well as providing clear guidelines for market participants and ending the strategy of “regulation by enforcement.”
Bitcoin (BTC)
Ethereum (ETH)
XRP (XRP)
