Labels do not decide. Substance does.
A token is classified by three things: its nature, the rights or value it represents, and the business model behind it.
"Utility," "governance," and "meme" carry no legal weight on their own.
Two tokens with the same marketing label can fall into two completely different categories.
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Four outcomes. One decision tree.
Prohibited: issuance is banned outright.
Category 1: needs a Licence before you issue.
Category 2: no Licence, but every placement must go through a Licensed Distributor.
Exempt: no requirements before issuance, but you stay under supervision.
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Category 1, Part A: the stablecoins
A Fiat-Referenced Virtual Asset holds a stable value against one or more fiat currencies. The industry calls these stablecoins.
They typically have no legal tender status and are not issued to pay for goods or services.
Sharp detail: a stablecoin pegged to the local fiat currency often won't be approved.
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Category 1, Part B: anything tied to the real world
An Asset-Referenced Virtual Asset represents ownership of, or income from, a real-world asset (property, metals, financial instruments, IP).
Example 1: a token minted and redeemed against the price of one ounce of gold. Gold is an RWA, so it's Category 1.
Example 2: a token giving rights to rental income and sale profits from real estate. That income is an RWA entitlement, so it's Category 1 too.
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Category 2: the "everything else" that is still not free (corrected)
Not Category 1 and not Exempt?
It's Category 2.
Freely transferable tokens that reference nothing external usually land here.
Example: a freely tradable oracle token that pays for data requests. No Licence and no prior approval needed to issue it.
The catch: you cannot place or distribute it yourself.
A Licensed Distributor handles all placement and takes on responsibility for validating that you comply with the rules.
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Exempt: real tokens, minimal friction
Non-Transferable VAs: not sold, not redeemable, can't move between wallets. Think commemorative tokens or completion badges.
Redeemable Closed-Loop VAs: redeemable for goods or services inside the issuer's or its merchants' closed loop only. Think loyalty points and discount schemes that can't be traded.
The rule: Exempt does not mean unregulated.
Both skip pre-issuance approval, but both stay under supervision.
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One line is banned. And one myth needs killing.
Banned: Anonymity-Enhanced Cryptocurrencies (privacy coins). In some jurisdictions, issuing them and all activity around them, is prohibited.
Myth: "my collectible is automatically exempt." Not true. A purely commemorative, non-transferable collectible is Exempt, but the same collectible referencing a real-world asset becomes Category 1.
Same format, different category, because the regulator reads the substance.
Sep 23, 2026 · 12:41 PM UTC
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Before you mint, ask what it references.
The category follows the substance, not the pitch deck.
Getting this wrong means issuing without a Licence you needed, or over-building for a token that was Exempt all along.
@VA_TheAdvisory maps your token to the right category before you write a line of Solidity.
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