What Are the Regulatory Implications of Classifying a Token as “Fee-Sharing” versus “Utility”?

Classifying a token as "fee-sharing" (granting a share of protocol revenue) significantly increases the likelihood that it will be deemed a "security" by regulators, particularly under the US Howey Test. Securities are subject to strict registration and disclosure requirements.

A pure "utility" token, whose value is tied only to its consumption for a product or service, has a better chance of avoiding security classification, though this distinction remains legally ambiguous and context-dependent.