The SEC’s crypto cases look very different when the same rules are applied to the collectibles millions of Americans grew up buying.
In 2023, Rep. Ritchie Torres asked SEC Chair Gary Gensler a simple question: if he bought a Pokémon card in a store, was that a securities transaction?
Gensler immediately said no.
Torres changed one fact: suppose the card was tokenized and bought on a blockchain exchange. Suddenly Gensler needed to “know more.” He turned to Howey: did buyers expect profits based on the efforts of others? The official hearing transcript records the exchange.
Why was the cardboard version so obvious?
The Adult Who Is Too Poor to Invest. The Child Who Can Buy Pokémon.
Start with the purpose of securities regulation: protecting investors who may not be able to understand or bear investment risk.
An adult may be barred from many private offerings unless he is an accredited investor. The SEC’s current individual thresholds include more than $1 million in net worth, excluding a primary residence, or income above $200,000 individually or $300,000 jointly.
Under Rule 506(b), non-accredited purchasers are limited and must have enough financial and business knowledge to evaluate an investment’s merits and risks, alone or with a purchaser representative.
Now compare that with Pokémon.
Pokémon has marketed games, cartoons and collectible cards to children for decades. It still has official TCG Live child accounts for players below the digital age of consent.
A child can have almost no wealth, no investment experience and little ability to evaluate scarcity or speculative risk. Yet securities law imposes no accreditation test, sophistication test or prospectus requirement before that child enters the Pokémon collectible ecosystem.
That is because Pokémon cards have already been placed on the “not a security” side of the line. Reg D does not apply to them. But that is exactly why the line deserves scrutiny.
And those children grew up.
The kids who met Pikachu and Blue-Eyes White Dragon in the late 1990s and early 2000s are now adults with disposable income. They grade, trade and speculate on the same franchises. The childhood audience became part of the adult secondary market.
The shows and games are therefore not economically irrelevant decoration. They helped create the attachment and cultural value that supports today’s collectible market.
Run Howey Without Saying “Pokémon”
Forget the labels and describe the economics.
A centralized company creates an asset. It deliberately creates rarity tiers. It controls production and reprints. It sells randomized packs containing scarce assets. It continually spends money marketing and developing the franchise that makes those assets desirable. Some buyers use them. Others preserve them in mint condition and hope they appreciate.
Pokémon itself says “collectibility is an important part” of the trading card game.
It also controls supply. Pokémon says it responds to shortages by printing products at maximum capacity and reprinting products to replenish retailers.
That supply matters financially. The new 30th Celebration set demonstrated it in real time. Exceptionally generous pull rates increased the availability of rare cards, and Kotaku reported that resale prices were being “demolished”. Sports Illustrated likewise reported unusually high pull rates after the September 2026 release.
This is not Picasso or vintage wine. Pokémon has an identifiable company managing the franchise, marketing it, licensing it, producing entertainment and operating the card ecosystem.
That sounds remarkably similar to the “efforts of others” argument used against centralized crypto projects.
Yu-Gi-Oh! Has the Same Problem
The comparison is not unique to Pokémon.
Yu-Gi-Oh! also combines a centrally managed entertainment franchise with randomized card products, rarity levels, reprints and a large secondary market. Konami continues releasing products tied directly to characters and themes from the animated franchise.
A Blue-Eyes White Dragon can be a game piece. It can also be bought, graded and stored as a speculative collectible.
Calling one use “consumption” does not settle the securities question.
LBRY Proves Utility Is Not an Escape Hatch
That point matters because the SEC won SEC v. LBRY.
LBRY Credits had actual utility. They were used in a functioning content-distribution network. Some purchasers bought LBC to use that network.
The court nevertheless held that consumptive and speculative uses could coexist. Utility did not prevent the offering from being an investment contract. Read the decision.
So “you can play a game with Pokémon cards” cannot be the answer.
Many valuable cards will never touch a tournament table. They are immediately sleeved, graded and stored. The existence of players using other copies is no more conclusive than the existence of people actually using LBC.
There is a real distinction: LBRY made unusually explicit statements connecting its continued development work to LBC’s prospective value. Pokémon generally sells cards as games and collectibles rather than promising investors returns.
That may matter under Howey. But it is a much narrower distinction than “crypto is an investment; Pokémon is a collectible.”
The Double Standard Is the Question
None of this proves that Pokémon or Yu-Gi-Oh! cards are securities. Howey is transaction-specific, and every element still has to be established.
Nor does different enforcement automatically establish an unlawful selective-enforcement claim.
The problem is simpler.
The SEC has applied an elastic, economic-reality test to crypto while treating familiar collectibles as obviously outside securities law. Yet many of the facts used to characterize crypto offerings as investment contracts also appear here: speculation, issuer-created scarcity, issuer-controlled supply, secondary markets, consumptive and investment buyers, and continuing work by a centralized promoter that helps sustain demand.
The investor-protection contrast makes it harder to ignore.
An adult can be considered insufficiently wealthy or sophisticated to enter certain private investments. Meanwhile, a child can grow up inside a commercial ecosystem built around randomized scarce assets, become an adult collector, and help make the market in those same assets.
So run the test blind.
Remove the words blockchain, token, card and game. Describe the transaction, the scarcity, the secondary market, the buyer’s expectations and the promoter’s continuing efforts.
Apply Howey.
Then reveal whether the asset was LBC, a meme coin, a Charizard or a Blue-Eyes White Dragon.
If the answer changes when the noun changes, the SEC has some explaining to do.