Coinholder Remuneration Prohibition

Definition ∞ Coinholder remuneration prohibition refers to legal or regulatory restrictions preventing digital asset holders from receiving passive income or returns. This concept often arises in jurisdictions where certain digital assets are classified as securities, and their distribution of earnings to holders might be restricted without proper registration or licensing. The prohibition aims to protect retail investors by preventing unregistered offerings that could be deemed illegal dividends or interest payments. It impacts how projects structure their token economics and engage with their user base.
Context ∞ The discussion around coinholder remuneration prohibition is a significant regulatory hurdle for many digital asset projects, particularly those with staking or yield-generating mechanisms. A key debate involves distinguishing between utility tokens and security tokens, with regulators seeking clear criteria for when such prohibitions apply. Future developments will likely involve more precise legal definitions and regulatory guidance, influencing token design and distribution strategies worldwide.