Token Taxonomy

Definition ∞ Token taxonomy is a classification system used to categorize different types of digital tokens based on their underlying purpose, functionality, and economic characteristics. This framework helps in understanding the diverse utility of tokens, from utility tokens and security tokens to stablecoins and governance tokens. It provides clarity for both market participants and regulators.
Context ∞ Discussions in crypto news often involve token taxonomy, particularly in the context of regulatory clarity and legal classification of digital assets. Establishing a consistent taxonomy is critical for developing appropriate legal frameworks and ensuring market integrity. The ongoing debate aims to differentiate tokens effectively to apply relevant rules and foster responsible innovation.