Can a Token Initially Offered as a Utility Token Later Be Deemed a Security?

Yes, the legal classification of a token is not static and can change over time based on the facts and circumstances. A token initially sold with strong utility and minimal expectation of profit might later be deemed a security if the issuer continues to make promises of appreciation or if the token is primarily traded for speculative purposes.

Conversely, a security token could potentially transition to a utility token if the network becomes sufficiently decentralized.