Can a Security Token Ever Transition into a Non-Security (Utility) Token?
Yes, it is theoretically possible, primarily by achieving "sufficient decentralization." If the network evolves to a point where no single entity's managerial efforts are crucial to the token's value, and its primary purpose shifts to consumptive use, the token may cease to meet the Howey Test criteria and no longer be considered a security.
Glossar
Transition
Equilibrium ⎊ Transition, within cryptocurrency and financial derivatives, signifies a shift in market states, often driven by evolving liquidity conditions and order flow dynamics.
Howey Test Criteria
Framework ⎊ The Howey Test, originating from the Supreme Court’s 1946 decision in SEC v.
Security Token
Provenance ⎊ Security Tokens, within the context of cryptocurrency and financial derivatives, represent a digitized form of ownership rights, typically in an underlying asset, and their verifiable history is paramount for establishing trust and regulatory compliance.