It's not clear that the SEC has jurisdiction here; there doesn't seem to be a bright line test deciding if crypto is a security or a commodity. This behavior might be better regulated by the FTC than the SEC.
This is a case of "there is a bright line but the community doesn't like where they painted it, so they pretend there isn’t one."
[1] https://www.sec.gov/corpfin/framework-investment-contract-an...
[1]: https://decrypt.co/123032/cftc-chair-says-ethereum-is-a-comm...
His argument appears to be "let's just sunk-cost our way through instead of actually doing the correct thing."
> “It’s been listed on CFTC exchanges for quite some time, and for that reason,” said Behnam, who argued that it creates a “direct jurisdictional hook” for the agency to police both ETH’s derivatives market and underlying market.
Either way they're literally only talking about ETH, which is again, clearly a security as following their framework, nothing else has a long history of being listed on a CFTC exchange. But I digress.
You can make the same argument about the SEC.
- Investment of money: Nike charges for shoes.
- Expectation of profit: people buy limited edition expecting hoping they go up in value.
- Efforts of others: The shoes go up in value because Nike won’t issue more shoes, will promote the shoes, and will continue to make investments in its brand.
Also these all pass the Howey test and in your view would be securities:
- Breakfast cereal with toys inside
- Condos
- World of Warcraft items
And essentially anything people might sell for a profit.
The Howey test is a starting point but no matter what the SEC says, the courts don’t actually believe that everything is a security. The Howey test is not enshrined in law but is rather a heuristic starting point.