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Governance tokens have been a hot topic in the blockchain space. They often grant holders the right to vote on network upgrades or protocol changes, but their classification as utility or security tokens can be murky. Utility tokens are designed to provide access to a product or service, while security tokens represent an investment in a company. Regulators have been focusing on this distinction to ensure compliance with financial laws. It's crucial for token issuers and investors to understand the implications, as misclassification can lead to legal consequences. Balancing innovation with regulatory compliance is key in this evolving landscape.
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