What Is the Legal Distinction between a “Utility Token” and a “Security Token” in the US?

A security token is a crypto asset that is deemed an "investment contract" under the Howey Test, meaning it represents an investment in a common enterprise with an expectation of profit from others' efforts. A utility token is intended to grant access to a network's product or service, and its value is derived from its use within that ecosystem, not from a passive investment expectation.

The SEC has been skeptical of most claims of utility, often classifying them as securities at the time of their initial sale.