Utility Token Status

Definition ∞ Utility token status designates a digital asset that grants holders access to a specific product, service, or network functionality within a blockchain ecosystem. Unlike security tokens, utility tokens are not primarily intended as investment contracts but rather as a means to use a platform. Their value is derived from their usefulness within the associated network. This classification is critical for regulatory purposes.
Context ∞ The regulatory classification of a digital asset as having utility token status is a recurring and significant topic in cryptocurrency news and legal discussions. Regulators worldwide are working to define clear criteria, impacting how these tokens are issued, traded, and taxed. Projects often strive for this status to avoid being classified as securities, which carry more stringent compliance obligations.