--- title: Utility Token url: "https://www.unknowngravity.com/en/glosario/utility-token" site: Unknown Gravity published: "2025-06-07T15:18:19+00:00" modified: "2026-07-30T15:43:02+00:00" language: en-US description: "A utility token is a type of digital asset issued on blockchain which gives its owner the right of access, use or interaction with specific functions within a decentralized technological ecosystem…" section: "Home > Utility Token" --- # Utility Token GLOSSARY · BLOCKCHAIN & WEB3 Digital token that grants access to products or services within a blockchain platform. WHAT IS IT? · FOR DUMMIES A **utility token** is like a **digital chip or ticket** that you can use within an app, game or blockchain platform. It is used to access features, pay for services or unlock content, but **it does not give you ownership** or dividends the way a share would. It's useful, but it's not a direct financial investment. WHAT IS IT? · PRO A **utility token** is a type of **digital asset issued on blockchain** which gives its owner the **right of access, use or interaction** with specific functions within a decentralized technological ecosystem, **without representing ownership interest, dividends or financial returns**. Its main function is to enable the use of a product, service or network, acting as **access or incentive mechanism**, not as a regulated investment instrument. It differs from the **Security Token** in that it is not designed to represent a financial value or a property right, but to fulfill a **utility function** within a Web3 platform. Common examples of utility tokens include: - **GRT** in The Graph (consultation and access to indexed data), - **BAT** in Brave Browser (advertising interaction), - **MATIC** in Polygon (payment of network fees), - **AXS** in Axie Infinity (participation in the game and partial governance). Utility tokens can be used to: - Pay for services within the dApp or protocol. - Unlock premium features or additional levels. - Participate in non-binding internal voting (in some cases). - Encourage user activity (rewards for use, liquidity mining, etc.). From a legal standpoint, a utility token has to be designed carefully so that it does not end up being **a financial instrument**. In the EU that is decided by **MiFID II** and, in Spain, by **Law 6/2023**, applying the criteria of the ESMA guidelines. **MiCA** applies only when the token is not a financial instrument. In the United States the test is the **Howey Test** (Art. 2(4) of Regulation (EU) 2023/1114; Annex I, Section C, of Directive 2014/65/EU). Getting its legal, technical and communication structure right is essential to avoid regulatory conflicts. ## 01 / Key points - It is a token that provides access or utility within a blockchain platform - It does not represent property, dividends or financial rights - Its use can be technical, functional or interactive within an app or protocol - It's common in games, DeFi platforms, Web3 social networks, and decentralized services - It may have market value, but its purpose is not speculative or patrimonial ## 02 / Advantages - **Facilitates access to Web3 services and products** without intermediaries - **Encourages participation and adoption of decentralized platforms** - **Flexible and adaptable design** to multiple business models - **Lighter regulatory load than a security token, but not exempt**. Since 30 December 2024, offering it to the public in the EU requires drawing up a MiCA white paper and notifying it to the competent authority before publishing it. A retail buyer who buys directly from the issuer or the placer also has 14 days to withdraw. Only listed cases fall outside, such as free offers or those not exceeding one million euros over twelve months (Arts. 4 to 13 of Regulation (EU) 2023/1114) - **Can be used as a loyalty tool, gamification or exclusive access** ## 03 / Disadvantages - **High risk of misuse as a disguised security**, if profitability is promised - **Subject to market volatility**, which can make it difficult to use it in a stable way - **Less protection than in a regulated security**, although MiCA gives 14 days of withdrawal to the retail buyer who buys from the issuer or the placer, and makes the issuer liable for the content of the white paper (Arts. 13 and 15 of Regulation (EU) 2023/1114) - **Dependency on project success**, since it loses value if the DApp fails - **In some cases, it may be unnecessary and used only to raise funds (token to be tokenized)** RELATED CONCEPTS [Token](/en/glosario/token) [Smart Contract](/en/glosario/smart-contract-contrato-inteligente) [Smart contract](/en/glosario/smart-contract) [Cryptocurrency](/en/glosario/criptomoneda) [Security Token](/en/glosario/security-token) KEEP LEARNING [Tokenomics that work: How to design an economy that doesn't collapse in 6 months](/en/articulos/tokenomics-que-funcionan-como-disenar-una-economia-que-no-se-derrumbe-en-6-meses) [How to prevent your project from becoming (unintentionally) a security token?](/en/articulos/como-evitar-que-tu-proyecto-acabe-siendo-sin-querer-un-security-token) [What is the difference between regulated and unregulated tokenization?](/en/articulos/tokenizacion-regulada-vs-no-regulada-diferencias-clave-y-que-debes-saber) [Tokenize or digitize? 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