Function-Based Classification categorizes digital assets according to their primary utility or purpose within an ecosystem. This approach distinguishes tokens based on whether they serve as a medium of exchange, a store of value, a governance right, or a utility for accessing specific services. It moves beyond simple labels to analyze the actual role and economic characteristics of a digital asset. Such classification aids in regulatory assessment and helps users understand a token’s practical application.
Context
Function-based classification is a crucial area for regulatory bodies worldwide as they seek to develop appropriate legal frameworks for digital assets. A key debate involves establishing clear and consistent criteria to apply this classification across diverse token types and evolving use cases. Future regulatory efforts will likely refine these distinctions to provide greater clarity for market participants and to ensure effective oversight without hindering innovation.
The White House framework mandates a function-based asset taxonomy and regulatory coordination, ending the prior enforcement-only compliance uncertainty.
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