How Does the Security Classification Impact the Ability to Offer Token-Based Derivatives?

If a token is classified as a security, any derivative based on it (futures, options, swaps) must comply with the strict regulations governing securities derivatives. This typically requires the derivative to be traded on a registered exchange, subject to oversight by bodies like the SEC or CFTC.

This classification severely limits the ability to offer the derivative on decentralized or unregistered platforms, restricting market access and liquidity.