# Token classification `kaal:entity:token-classification` **Status.** derived This node is assembled mechanically from the 11 claims that carry the concept tag `token-classification`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 11 claims across 2 works, 2018 to 2022. **2018** - [3117224-021](https://wulfkaal.github.io/claims/3117224-021) [condition/evidenced] -- The UK Financial Conduct Authority takes the position that ICOs may be regulated as securities depending on the aspects and rights the coin holder obtains through holding the coin, assessed case by case. > The FCA has taken the position that ICO's may be regulated as securities depending on the different aspects and rights the coin holder obtains through holding the coin. Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224 - [3117224-024](https://wulfkaal.github.io/claims/3117224-024) [condition/evidenced] -- In Singapore there is no direct regulation of digital tokens under the Securities and Futures Act unless the currency is linked to an ownership or security interest in the issuer's assets or property. > There is no direct regulation under the SFA unless the currency is linked to an ownership or security interest in the issuers assets or property. Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224 - [3117224-028](https://wulfkaal.github.io/claims/3117224-028) [definitional/evidenced] -- Under German law the decisive factor in classifying a token is which rights are associated with it; labels such as participation token, utility token, or payment token give only initial guidance and cannot be relied upon outside a comprehensive and binding regulatory classification. > A prior classification of the token (i.e. as a "participation token", "utility token", or "payment token") can provide initial guidance as to the type of token it is under German law, but is not to be relied upon outside a comprehensive and binding regulatory classification. Wulf A. Kaal, Initial Coin Offerings The Top 25 Jurisdictions and Their Comparative Regulatory Responses (2018). SSRN: https://ssrn.com/abstract=3117224 **2022** - [4021599-006](https://wulfkaal.github.io/claims/4021599-006) [failure/argued] *(failure mode)* -- The lack of a clearly delineated nomenclature for the term securities token has produced divergent uses and interpretations of that term, especially in relation to the term utility token. > The lack of a clearly delineated nomenclature for the term "securities token" resulted in various uses and interpretations of the term securities token, especially vis-à-vis the term "utility token." Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-007](https://wulfkaal.github.io/claims/4021599-007) [definitional/argued] -- Securities tokens are typically investment contracts while utility tokens typically provide their users with access to a product or service, even though the lines between the different token types are blurred regularly. > appreciation, dividends or revenue share.8 While the lines between the different types of tokens are blurred regularly,9 securities token are typically investment contracts, whereas utility tokens typically provide their users with access to a product or service. Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-008](https://wulfkaal.github.io/claims/4021599-008) [failure/asserted] *(failure mode)* -- The boundaries between the different types of tokens are regularly blurred, so the securities token versus utility token distinction functions as a typical case distinction rather than a clean partition. > While the lines between the different types of tokens are blurred regularly,9 securities token are typically investment contracts, Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-010](https://wulfkaal.github.io/claims/4021599-010) [condition/argued] -- A key commonality that permits delineating securities tokens from other token designs is that securities tokens derive their value from an external tradeable asset. > Key commonalities of securities tokens characteristics enable the delineation of securities tokens from other token designs. A key commonality of securities tokens includes its ability to derive their value from an external tradeable asset.12 The underlying assets for Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-012](https://wulfkaal.github.io/claims/4021599-012) [definitional/evidenced] -- The literature on securities tokens converges on two commonalities: that a securities token functions as or is synonymous with traditional security assets, and that securities tokens are subject to traditional securities regulation. > that a securities token functions as or is synonymous with traditional security assets,15 and 2. that securities tokens are subject to traditional securities regulation.16 Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-023](https://wulfkaal.github.io/claims/4021599-023) [definitional/argued] -- Utility tokens can be distinguished from securities tokens along several core factors: the purpose of the token, associated valuation, associated rights, user expectations, and regulatory status. > Utility tokens can be distinguished from securities tokens based on several core factors, including but not limited to the following: the purpose of the token, associated valuation, associated rights, user expectations, and regulatory status.38 Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-027](https://wulfkaal.github.io/claims/4021599-027) [mechanism/argued] -- The Howey test operates as the practical sorting device between the two categories: a token that passes the Howey test is deemed a security token, while a token that does not qualify under Howey is often classified as a utility token. > Utility tokens can also be distinguished from securities tokens through the Howey test. While a token that passes the Howey test is deemed a security token, a token that does not qualify under the Howey test is often classified as a utility token.45 The SEC provides Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 - [4021599-029](https://wulfkaal.github.io/claims/4021599-029) [predictive/speculative] -- As the digital asset industry matures, the distinguishing features between token categories and the associated case law will likely increase and provide more guidance to market participants. > As the industry matures, the distinguishing features and associated case law will likely increase and provide more guidance to market participants. Wulf A. Kaal, Securities Versus Utility Tokens (2022). SSRN: https://ssrn.com/abstract=4021599 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/token-classification.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.