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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.
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
Security token
A security token — the SEC calls it a digital security, commonly a tokenized security — is a stock, bond or other security issued as a crypto asset, with the ownership record kept wholly or partly on a blockchain. In the US, it remains a security, and the securities laws apply to it.
What it means for you. In the US, the SEC says a tokenized share or bond can carry rights that differ materially from the underlying security, including economic and voting rights, and whether the issuer or an unaffiliated third party tokenized it changes what you actually hold. Offers and sales of securities must be registered with the SEC or fit an exemption.
Sources: SEC and CFTC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Release 33-11412, 2026), SEC: Crypto assets and the federal securities laws, SEC investor alert: Exercise Caution with Crypto Asset Securities · checked 4 October 2026