What Is the Difference between a Security Token and a Utility Token in a Derivatives Context?

A security token represents ownership or a financial interest in an asset, like a stock, bond, or a tokenized derivative, and is subject to securities regulations. A utility token provides access to a product or service on a blockchain network, like paying for transaction fees.

A tokenized derivative is typically classified as a security token because it represents a contractual right to a future cash flow or asset, making it an investment contract.