Definition ∞ Utility Token Definition specifies a digital asset designed to provide access to a particular product, service, or network functionality. Unlike security tokens, utility tokens are not intended to represent an ownership stake or a claim on future profits from an enterprise. Their value is derived from their usefulness within a specific ecosystem, allowing users to pay for services, participate in governance, or gain exclusive access. This classification is crucial for regulatory differentiation.
Context ∞ The utility token definition remains a subject of ongoing regulatory clarification across various jurisdictions, impacting how projects are structured and marketed. Regulators often scrutinize the actual function and use cases of a token to determine if it genuinely provides utility or if it primarily serves as an investment contract. News reports frequently highlight legal precedents and new guidelines that help delineate the boundaries between utility and security classifications, shaping the digital asset landscape.
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