Token

Token, cryptocurrency and currency.

• Native cryptocurrency (BTC on Bitcoin, ETH on Ethereum): part of the protocol itself, used to pay network fees. A token, by contrast, lives inside a contract on that network.
• Token: any asset issued by contract on a blockchain. It can be a stablecoin, an access right or a tokenized security.
• Legal tender: issued by a central bank. In the euro area, euro cash is the only legal tender, according to the Council of the EU; neither cryptocurrencies nor tokens are.

In the EU, MiCA calls both cryptocurrencies and tokens a "crypto-asset": a digital representation of a value or of a right that can be transferred and stored electronically using distributed ledger technology or similar technology (Art. 3(1)(5) of Regulation (EU) 2023/1114).

Types of token. By function and legal status:

• Utility token: only provides access to a good or a service supplied by its issuer (Art. 3(1)(9) of MiCA).
• Security token: represents a financial instrument, such as a share or a bond. It falls under securities law, not MiCA, which excludes financial instruments (Art. 2(4)(a)).
• Fungible or non-fungible: a fungible token is interchangeable with another identical one (ERC-20); an NFT is unique (ERC-721). MiCA does not apply to crypto-assets that are unique and not fungible (Art. 2(3)).
• Regulated stablecoins: an EMT is referenced to a single official currency (Art. 3(1)(7)) and an ART to other assets or a combination (Art. 3(1)(6)).
• Governance token: lets holders vote on decisions of a protocol or a decentralized organization.

How one is created. The contract is coded and audited, deployed on the chosen network, and it defines who may issue (mint), destroy (burn) or restrict transfers. If the token is a security, the issuance also needs the matching legal structure.

Not to be confused with. In payments, tokenizing a card means replacing its real number with another code that only works for paying in a specific context, such as a phone (we explain it in card tokenization). In IT security, an authentication token is a temporary code or a two-factor device, such as the code a bank sends to confirm a transaction. Neither is a blockchain token.

Official sources: Regulation (EU) 2023/1114, MiCA (EUR-Lex); ERC-20: Token Standard; ERC-721: Non-Fungible Token Standard; ERC-1155: Multi Token Standard; Council of the EU press release, Dec. 19, 2025 (legal tender of cash).

Framework verified as of October 13, 2026. At Unknown Gravity we design and build tokens and their smart contracts. The legal classification is the responsibility of the client's legal counsel, with whom we work. Talk to us.