Utility Token

Tokens that are designed specifically to be able to help people use something.

What Is a Utility Token? 

Utility tokens are tokens that are designed specifically to be able to help people use something. The use of utility tokens is limited to the particular ecosystem that the utility token is designed for. For example, one day, Uber could have its own utility token which people use to pay for rides on the Uber network. Utility tokens are not designed as investment vehicles. 

The SEC is constantly on the watch for new utility tokens and security tokens. The regulator uses the Howey Test to determine whether or not a particular token is classified as a security token or a utility token. Utility tokens are not subject to the same regulations and requirements that security tokens are, because they are not considered to be investment contracts. One of the most well-known utility tokens is Filecoin, which is a utility token that is designed to help users use the Filecoin decentralized data storage platform.