Security Token Classification

Security token classification is the legal question of whether a given crypto asset counts as a regulated investment instrument rather than a commodity, payment token or pure utility. The answer matters because a token treated as a security typically brings disclosure, prospectus, registration and intermediary-licensing obligations for issuers and trading venues. Regulators usually look at economic substance rather than labels: whether buyers contribute funds expecting profit generated by the efforts of a central team, whether rights resemble equity or debt, and how the asset is marketed. Classification is jurisdiction-specific, can change as a network becomes more decentralised, and is frequently contested in courts and consultations. This is a legal concept, not a judgement about any particular token's quality.