Utility Token Exemption

Definition ∞ A utility token exemption refers to a legal or regulatory provision that distinguishes certain digital tokens from securities, thereby freeing them from stringent securities regulations. This classification typically applies to tokens primarily intended to grant access to a network or service, rather than serving as an investment contract. Such an exemption facilitates the development and distribution of functional blockchain applications. It reduces regulatory burdens for specific token types.
Context ∞ The criteria for qualifying for a utility token exemption are a central point of contention and legal discussion across various jurisdictions, including the United States. Debates often involve the “Howey Test” and its applicability to evolving token functionalities. Future regulatory clarity on this exemption is crucial for fostering innovation within the digital asset space.