Toward a Conceptual Framework and a Token Financial Risk Index

Issuer-generated and market-emergent gains are often conflated in the regulatory assessment of crypto-assets. Across jurisdictions, the presence of an “expectation of profit” is frequently treated as a decisive indicator that a token should be classified as a financial instrument. This paper argues that such an approach overlooks a critical distinction: the origin of profit. Building on insights from financial economics and the economics of networks, we differentiate between issuer-generated returns, which arise from organized economic activity and identifiable issuers, and market-emergent returns, which arise from decentralized market dynamics, liquidity, network effects, and collective expectations. We then develop a conceptual 2×2 framework that classifies crypto-assets along two dimensions, the source of profit and the degree of issuer dependence, highlighting how different token designs occupy distinct regulatory risk zones. To operationalize the framework, the paper introduces the Token Financial Risk Index (TFRI), a point-based scoring model that evaluates economic rights embedded in the token, profit source, issuer dependence, and narrative framing. Finally, drawing on narrative economics, we show how communication strategies can amplify regulatory exposure through narrative risk, even when token structures are ostensibly non-financial. The proposed framework and index aim to support more coherent token classification and contribute to regulatory approaches better aligned with decentralized value formation.