Security Tokens vs. Utility Tokens
Fleeting- External reference: https://www.blockchain-council.org/blockchain/security-tokens-vs-utility-tokens-a-concise-guide/
Security tokens are digital assets that derive their value from an external asset that can be traded. These are subject to Federal laws that govern security. It is mandatory for the security tokens to comply with these regulations. Failure to comply would lead to severe consequences such as penalties and potential derailment of the development of the project.
— https://www.blockchain-council.org/blockchain/security-tokens-vs-utility-tokens-a-concise-guide/
Utility tokens are user tokens or app coins. This is a token that is given out during crowdsales as a project executes an ICO. When a company creates a utility token, it means that it is essentially creating a form of a digital coupon that can be redeemed in the future for discounted fees or special access to a product or service. Unlike security tokens, utility tokens are not used as investments as they can be exempted from the federal laws governing securities if they are properly set up.
— https://www.blockchain-council.org/blockchain/security-tokens-vs-utility-tokens-a-concise-guide/
Security tokens and utility tokens can be distinguished based on the intended use and functionality of the tokens. Security tokens are created as investments. Dividends in the form of additional coins are given to token holders each time the issuing company of the tokens earns a profit in the market. Users who hold the security token will also gain ownership of the company.
— https://www.blockchain-council.org/blockchain/security-tokens-vs-utility-tokens-a-concise-guide/