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- More than half of all listed crypto tokens have failed since 2021.
- Regulatory pressure pushed teams to launch tokens with no enforceable rights.
- Meme coin speculation filled the vacuum left by collapsing utility tokens.
The Crypto market is facing a brutal reality check. Millions of tokens launched over the past four years are now defunct, and the pace of collapse is accelerating. What looks like market excess, however, may be something more structural. According to crypto analyst Alex Krüger, most tokens were not simply mismanaged — they were designed in a way that made failure inevitable.
New data shows the scale of the damage. Since 2021, more than 13.4 million crypto tokens have effectively died. Over 11.6 million of those failures occurred in 2025 alone, marking the most severe wipeout the industry has ever seen.
Token Failures Surge as Market Floods With Supply
Research from CoinGecko shows that 53.2% of all cryptocurrencies listed on GeckoTerminal had failed by the end of 2025. The number of listed crypto projects exploded from roughly 428,000 in 2021 to more than 20.2 million by 2025 — a surge that far outpaced real demand.
Failures rose steadily year by year, but 2025 broke every record. That single year accounted for more than 86% of all token collapses since 2021, dwarfing previous downturns. Certain sectors fared even worse, with music- and video-related tokens seeing failure rates close to 75%.
How Regulation Shaped “Rights-Free” Tokens
Krüger argues the collapse stems from how crypto projects reacted to U.S. regulation. To avoid being classified as securities under the SEC’s Howey Test, many teams stripped tokens of enforceable rights altogether.
The Howey Test defines a security as an investment involving money, shared enterprise, profit expectations, and reliance on others’ efforts. To avoid triggering those criteria, token issuers removed governance claims, revenue rights, and legal protections.
The result was an asset class dominated by speculation rather than ownership. Token holders had no contractual rights, no transparency into treasuries, and no legal recourse if teams abandoned projects. Founders, meanwhile, faced no enforceable fiduciary obligations.
From Utility Tokens to Meme Coin Speculation
As confidence in VC-backed “utility” tokens eroded, retail traders increasingly turned to meme coins. These assets offered fewer promises and more upfront honesty — but also intensified speculation.
Also Read: Crypto VC Funding Doubled in 2025 — Here’s Where the Smart Money Went
Krüger notes this shift worsened market behavior, accelerating zero-sum trading and short-term gambling dynamics that left most participants worse off.
Krüger believes recovery requires a new generation of tokens built under clearer, modernized regulatory frameworks. Without enforceable rights and accountability, he argues, the industry will continue to produce assets optimized for hype rather than durability.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
