A New Paradigm for Crypto: How MLRT Lines Up With Howey, Cleanly

Source reviewed: Commissioner Hester M. Peirce — "New Paradigm: Remarks at SEC Speaks" (May 19, 2025).

At SEC Speaks 2025, Commissioner Peirce delivered remarks titled "A New Paradigm." The argument she advanced is one she has been making for years, but said with a new clarity: the Howey test is fine; the problem has been how the SEC applied it to crypto. Once you take the test seriously, a great many tokens — particularly those tied to functionally decentralized networks — fall outside it.

For Malairt (MLRT), a Bitcoin-style proof-of-work chain with no ICO, no premine, no foundation, no promoter, and CPU/GPU-mineable from genesis, the "new paradigm" is not a destination to reach. It is the starting condition.

What the "new paradigm" is

Peirce's speech makes a few moves that, together, reshape the conversation:

1. Howey is a lifecycle test, not a permanent label. A token can be sold inside an investment contract at one point and trade as something else later, once the promised efforts are delivered and the network is functionally decentralized.
2. Functional decentralization matters. Where a network has eliminated operational, economic, and voting control by an identifiable group, the trust dependencies that Howey worries about no longer exist.
3. A safe harbor for in-progress tokens. For tokens still inside an investment contract, a time-limited, conditional safe harbor would let them trade without securities registration while disclosure and investor-protection conditions are met.
4. A tailored registration regime for crypto offerings that genuinely require it.

The center of the speech, for our purposes, is the second point. Peirce is willing to say out loud that some networks do not implicate Howey because the "efforts of others" simply aren't there.

Paraphrased: where blockchain systems can eliminate mechanisms of control — operational, economic, and voting — they are not subject to the trust dependencies that intermediary-based arrangements give rise to and, therefore, should be excluded from the direct application of the federal securities laws.

That is the doctrinal hook. If a network has nobody to trust, it has nobody to register.

Walking MLRT through Howey

The Howey test asks four things: an investment of money, in a common enterprise, with an expectation of profit, derived primarily from the efforts of others. Take MLRT prong by prong.

Investment of money. A miner spends electricity and capital expense on hardware to earn MLRT. A buyer on a future secondary market spends money to acquire MLRT from a seller. The first prong is sometimes met depending on the path of acquisition, sometimes not.

Common enterprise. This is where MLRT begins to break the test. There is no enterprise. The protocol is software running on independent computers. There is no shared pool of capital under common management, no joint venture, no promoter aggregating returns. Each node operator and miner runs their own infrastructure for their own benefit.

Expectation of profit. A purchaser might hope MLRT appreciates. That is true of any commodity — corn, copper, gold. Hope of price appreciation is not, by itself, the Howey hook. The test is much more specific.

Efforts of others. This is where the test fully breaks down. There is no "other" whose efforts MLRT holders are depending on. The protocol's monetary policy is fixed in code: 50 MLRT initial subsidy, halving every 210,000 blocks, 2-minute target spacing, Bitcoin-style UTXO accounting. No foundation can change it unilaterally because there is no foundation. Software upgrades require rough consensus among independent miners and node operators, not a managerial decision by a controlling team.

That is what "functional decentralization" looks like in practice. It is not a marketing term — it is a property of how the network is built and how it persists.

Why MLRT skips the safe-harbor question entirely

Peirce's safe-harbor proposal is meant to help projects that did, in fact, start with a promoter and need time to decentralize. That is a real and useful policy. But it is not the only path.

MLRT didn't start with a promoter. There was no team selling tokens to investors with a promise to build a network. The network was built first as open-source software, and the tokens came into existence only as miners produced blocks. By the time anyone bought MLRT on a secondary market, the protocol was already running and the supply was already being distributed by code.

That fact pattern matters because it means MLRT does not need a clock to run out before the Howey analysis becomes friendly. The first MLRT was already a protocol-distributed asset on a permissionless network. It was never inside an investment contract.

In Peirce's lifecycle framing, MLRT effectively starts at the end state most other projects spend years trying to reach.

What functional decentralization looks like in MLRT specifically

It is worth being concrete, because "decentralization" gets used as a slogan more often than as a description. For MLRT:

• Operational control: Nobody can stop a node from joining the network. Nobody can halt block production. Nobody can blacklist an address at the protocol layer.
• Economic control: The block subsidy, halving schedule, and total supply ceiling are coded into the protocol. There is no foundation account that holds a meaningful fraction of supply.
• Voting control: Protocol changes require independent miners and node operators to upgrade their software. There is no on-chain governance contract by which a small group can pass changes over the heads of the network.
• Mining access: CPU and GPU mineable means there is no ASIC vendor effectively gating who can compete for block rewards.

Each of those properties weakens the "efforts of others" prong of Howey. Add them up and it is hard to identify the "others" at all.

Why this paradigm matters for the broader market

If Peirce's framing becomes the working paradigm — and the 2025–2026 trajectory of SEC speeches and roundtables suggests that it is — the market gets a workable taxonomy for the first time in a decade:

• Tokens that fund a startup and depend on its team are securities (or close enough) until decentralization is real.
• Tokens that operate as the native asset of a permissionless, decentralized network are not securities once that decentralization is real.
• A safe harbor lets the first category travel toward the second without a securities-law trap.

MLRT sits squarely on the non-security side of that line by construction. The work to get there was done before the genesis block, by designing a Bitcoin-style chain with no insider allocation and no central operator.

What this means for MLRT users

• MLRT's design is aligned with the principles Commissioner Peirce describes as putting a token outside the scope of the federal securities laws.
• MLRT does not depend on a future safe-harbor rulemaking to fit the framing. It is structured as a protocol-distributed, functionally decentralized asset from genesis.
• Functional decentralization is a property to maintain, not a milestone to clear. Run nodes. Mine. Don't let any single party accumulate operational control.
• None of this is a guarantee. A future Commission could rethink the framing. But the current direction of US crypto policy is sympathetic to networks that look like MLRT.

References

• New Paradigm: Remarks at SEC Speaks — Commissioner Hester M. Peirce, 2025-05-19

This article is editorial commentary published by the Malairte project. It is not legal or investment advice and does not represent the views of the U.S. Securities and Exchange Commission or any of its staff or commissioners.