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                     |title= Utility token — Decimal Wiki
                     |titlemode= append 
                     |keywords= utility token
                     |description= Utility token - what it is, what it is used for, and what risks are associated with it
                    }}
'''Utility token''' is a type of [[cryptocurrency]] [[token]] [[issue]]d by a [[DeFi|decentralized finance]] platform ([[blockchain]]) to provide its users with access to specific functionality and benefits. Utility tokens can be bought, sold, or exchanged for targeted use within a specific [[ecosystem]].

== Features of utility tokens ==
Utility tokens are usually issued through an [[ICO|Initial Coin Offering (ICO)]], [[IDO|Initial DEX Offering (IDO)]], or [[IEO|Initial Exchange Offering (IEO)]], where investors can acquire them in exchange for [[cryptocurrency|crypto]] or [[fiat|fiat currency]]. They are used to incentivize users to utilize the platform ("loyalty program") and play a crucial role in the [[network]]'s operation. For example, token holders with a certain amount of tokens may have the right to participate in blockchain development [[voting]] or gain access to unique features. Utility tokens can also be used as units of user rewards for performing actions or providing services on the platform<ref>[https://coinmarketcap.com/academy/utility-token-definition/ Utility Token Definition | CoinMarketCap] (RU)</ref>.

The use of utility tokens is limited to the specific platform for which they are intended. For instance, the [[BTT|BTT token]] operates within the ecosystem of the [[Bit.Team]] [[cryptocurrency exchange]]. Utility tokens are not intended for use as investments since they do not grant ownership [[stake]]s in the issuing company's assets<ref>[https://iqdecision.com/difference-between-utility-tokens-and-security-tokens/ Difference Between Utility Tokens and Security Tokens | IQ DECISION] (RU)</ref>.

Essentially, a utility token is nothing more than a digital coupon that allows you to utilize certain rights, services, or privileges within its blockchain.

== Key functions of utility tokens ==
The functionality of utility tokens within their ecosystems is quite broad:
* '''Internal currency.''' Used to purchase services or goods on the platform.
* '''Loyalty program.''' Provides token holders with access to unique features or benefits, as a [[Loyalty Point]]s.
* '''Discount mechanism.''' Enables the reduction of service rates or [[transaction fee|transaction fees]].
* '''Payment of fees.''' Compensates for [[transaction]] processing or other network processes.
* '''Staking in governance.''' Allows token holders to participate in blockchain decision-making through voting.

== Risks associated with utility tokens ==
The [[wikipedia:SEC|U.S. Securities and Exchange Commission]] (SEC) continuously monitors new tokens entering global listings. The regulator employs the [[Howey Test]] to determine whether a token qualifies as a [[security token]] or a utility token.

Although many projects refer to their tokens as utility tokens and effectively use them as such, the Howey Test may classify these tokens as securities, potentially subjecting their issuers to accusations of violating U.S. tax legislation. This occurred, for example, with [[BNB|Binance Coin]], which is used for fee payments, purchases, and discounts on the [[Binance]] exchange<ref>[https://www.binance.com/en/blog/660652 Binance and Coinbase Face SEC Charges: Market Reaction and Impact Explained | LD Capital on Binance Square](RU)</ref>.

== See also ==
* [[Native token]]

== Notes ==
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[[Category:Tokens]]
{{interwiki|ru=Служебный токен}}