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CFA Level I · CFA Level I Exam · Introduction to Digital Assets

A platform token grants holders the right to vote on protocol upgrades and to receive a share of transaction fees, and it is also needed to pay for services on the platform. Which classification is most appropriate for regulatory purposes?

A hybrid classification is most appropriate. The token gives access to services like a utility token, but fee-sharing is a profit claim resembling a security, and governance votes add further rights. Calling it purely utility or payment would ignore features that regulators consider.

  1. APure utility token, because it is used to pay for services
  2. BHybrid token, because it combines utility with governance and profit-sharing rightsCorrect
  3. CPayment token, because it can be exchanged for platform services

Explanation

The token combines service access (utility) with fee-sharing, a profit claim typical of securities, and governance rights. Because of the profit-sharing, labeling it purely utility or payment ignores features regulators weigh, so a hybrid classification fits best.

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