Utility Tokens represent future access to a company’s product or service. The defining characteristic of utility tokens is that they are not designed as investments; if properly structured, this feature exempts utility tokens them from laws governing securities.

If a crypto token derives its value from an external, tradable asset, it is classified as a Security Token and becomes subject to securities regulations. If an organisation meets all its regulatory obligations, the security token classification creates the potential for a wide variety of applications, the most promising of which is the ability to issue tokens that represent shares of company stock.