Library · Crypto, word by word · Tokens and supply
What is a utility token?
A utility token is a token meant to be used inside a network or app—to pay for a service, unlock a feature or access a product—rather than to represent a stake in a company. Calling a token a utility token does not by itself settle whether it is a security in law.
What it means for you
A token's use is real only if the network it works on exists and can be used now; tokens sold before launch are often bought in amounts far beyond any use. US regulators look at how a token is sold and marketed, not at its label.
How it works
In the US, the SEC's March 2026 interpretation sorts crypto assets into digital commodities, digital collectibles, digital tools, stablecoins and digital securities. A digital tool performs a practical function, such as a membership, ticket, credential or identity badge, with no passive yield and no rights to a business's income or assets; the SEC says such a tool is not itself a security. A non-security asset can still be sold subject to an investment contract, which is a security, and anything with the economic characteristics of a security is one regardless of label.
Sources: SEC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Mar. 17, 2026), SEC press release 2026-30: SEC clarifies application of federal securities laws to crypto assets · checked 4 October 2026
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