Types of tokens

Tokens are often grouped by what they do. The groups overlap, and one token can belong to more than one, but they help you know which questions to ask.

• Payment tokens are used to send and store value, much like money. Bitcoin is the best-known example.
• Stablecoins are payment tokens designed to stay at a steady price, usually one US dollar. The issuer holds reserves, such as cash and short-term US government debt, to back every token. In the US, the GENIUS Act of 2025 requires approved issuers to back their tokens one-for-one with cash and other safe, short-term assets.
• Utility tokens give you access to a product or service, like paying for file storage on a network.
• Governance tokens let holders vote on changes to a project, a bit like shareholders voting at a company meeting.
• Security tokens represent an investment, such as a share in a company, a bond or a fund. Putting an investment on a blockchain doesn’t change what it is, so securities laws still apply.
• Non-fungible tokens (NFTs) are one of a kind. “Fungible” means swappable, the way one dollar bill can be swapped for another. NFTs can’t be swapped like that, so each one can stand for a unique item, such as a piece of art.

Why does the type matter? It tells you which rules apply and where to look for risk. A stablecoin is only as good as its reserves. A security token is only as good as the legal rights behind it. A governance token depends on who holds the votes. Which of these matters most depends on your role: issuing the token, holding it, trading it or keeping it safe for clients.