Topic: SECURITY OR UTILITY TOKEN? (Read 126 times)
When people talk about security or utility tokens, I can do nothing but laugh. It's totally irrelevant.
There is a fine line between a coin that is considered a security and
a coin that is considered a utility token.
As the name implies, a utility tokens provide some sort of service or product to the end user.
A typical example of utility token is filecoin. It offers storage space to the users.
But, if the utility token is advertised as an investment opportunity (common enterprise with profit
expectation based mainly on efforts of other people), than it can easily be considered
a security token, despite its utility value.
So, as far as legal matters are concerned, the distinction is rather vague and SEC can easily
decide to treat a token as security, even though it may have great utility value.
a coin that is considered a utility token.
As the name implies, a utility tokens provide some sort of service or product to the end user.
A typical example of utility token is filecoin. It offers storage space to the users.
But, if the utility token is advertised as an investment opportunity (common enterprise with profit
expectation based mainly on efforts of other people), than it can easily be considered
a security token, despite its utility value.
So, as far as legal matters are concerned, the distinction is rather vague and SEC can easily
decide to treat a token as security, even though it may have great utility value.
Your disclaimer was almost correct, but the fact that you make the assumption only US persons are effected is incorrect. When the SEC makes a move against a coin or announces certain coins are securities that will effect the overall market. Take for instance the latest inquiry about whether Ethereum was a security. If it were determined that Ethereum was in fact a security then the whole market would have been effected, not only the people who have ETH in the USA. Also in another example Centra has been taken down and that could negatively effect crypto card coins or tokens, despite the fact they have down nothing wrong. There is a ripple effect here and it cannot be ignored I believe.
SEC has no power outside of USA. They can threaten you, they can scare you, but that's it. What happens outside of USA is not under their jurisdiction.
The type of a token really matters if you buy it for a long term. But for a short term is really doesn't matter whether it's a utility or security token. All you need is a hype around the project a good team and good marketing. So I don't think that most of investors pay attention to the type of the token when making decision to invest or not.
They are both useful. You cannot pick security over utility or vice versa, they are both important parts of everyday life. Any coin which serves one of these two purposes is good to go as long as the coin is good, the developers should also be dedicated to see the project go well. It really does not matter if token is a utility token or a security token, as long as it is a good one, then it will do well.
Your disclaimer was almost correct, but the fact that you make the assumption only US persons are effected is incorrect. When the SEC makes a move against a coin or announces certain coins are securities that will effect the overall market. Take for instance the latest inquiry about whether Ethereum was a security. If it were determined that Ethereum was in fact a security then the whole market would have been effected, not only the people who have ETH in the USA. Also in another example Centra has been taken down and that could negatively effect crypto card coins or tokens, despite the fact they have down nothing wrong. There is a ripple effect here and it cannot be ignored I believe.
There is too much focus currently on whether an ICO has a security or utility token. I read daily speculations about which one is better and ignorant people asking about to which they should invest their money.
In reality it does not matter. There is not only 2 use of tokens, there are hundreds of different uses and all the time new blockchain projects come up with new way to use tokens.
In my opinion only people who want to brag that they know the difference between security and utility token (when there is actually nothing to brag about) are talking about it. To an investor who wants to earn some profit from an ICO it does not matter.
Instead you should rather focus on the necessity of a token and see if it has real life use. Because that is what really matters.
P.S. I know that someone will comment here that in USA SEC treats ICO differently based on if they have security or utility token, and as far as I know that is the case. But like in all cases where SEC is involved we, the rest of the world do not care about that, as it is sole problem of USA residents.
https://medium.com/@filip.poutintsev/security-or-utility-token-f30b1268a816
In reality it does not matter. There is not only 2 use of tokens, there are hundreds of different uses and all the time new blockchain projects come up with new way to use tokens.
In my opinion only people who want to brag that they know the difference between security and utility token (when there is actually nothing to brag about) are talking about it. To an investor who wants to earn some profit from an ICO it does not matter.
Instead you should rather focus on the necessity of a token and see if it has real life use. Because that is what really matters.
P.S. I know that someone will comment here that in USA SEC treats ICO differently based on if they have security or utility token, and as far as I know that is the case. But like in all cases where SEC is involved we, the rest of the world do not care about that, as it is sole problem of USA residents.
https://medium.com/@filip.poutintsev/security-or-utility-token-f30b1268a816
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