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Crypto Terms:  Letter U
Jun 19, 2023 |
updated Apr 03, 2024

What is Utility Token?

Utility Token Meaning:
Utility Token - a token created with the purpose of helping individuals to use something.
1 minute

Let's find out Utility Token meaning, definition in crypto, what is Utility Token, and all other detailed facts.

The main purpose of utility tokens is to enable people to use something. A utility token can only be used in the specific ecosystem it was created for. For example, Filecoin is a utility token that was created to assist users when utilizing the Filecoin decentralized data storage network. It is one of the most well-known utility tokens. Though note that utility tokens are not created for investment.

The Securities and Exchange Commission (SEC) is always on the lookout for new utility and security tokens. The Howey Test is used by the regulator to assess whether a token is classified as a security or a utility token. Though since utility tokens are not considered to be investment contracts, they are not subject to the same restrictions and requirements as security tokens.