What is the difference between utility tokens and security tokens?
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2 Answers
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Utility tokens grant product access; security tokens confer equity or profits, I saw this firsthand during a project with a RegTech startup.
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Security tokens encode real-world assets or equity and trigger securities laws; utility tokens grant access to a product without ownership rights. In a project I advised, we split a token into two: a utility token for platform access and a security token for profit-sharing. Compliance, custody, and investor protections (KYC/AML, disclosures, accredited investors) dominated design decisions.
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