Can a Utility Token Transform into a Security Token over Time?
Yes, a utility token can potentially transform into a security token, a concept often referred to as "securitization creep." This happens if the token's use case or the network's degree of decentralization changes. If the token's value becomes predominantly driven by speculative investment rather than its utility, or if the network's success remains highly dependent on the efforts of a central team, it may fail the utility test and be reclassified as a security.
Glossar
Utility Token
Framework ⎊ A utility token, within the context of cryptocurrency, options trading, and financial derivatives, represents a digital asset designed to provide access to a specific product or service within a defined ecosystem, increasingly intertwined with sustainability initiatives.
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.