Security tokens are regulated with the classic securities legislation like the Securities Act (1993) or Securities Exchange Act (1934) in the USA; MiFID directive and Prospectus Regulation are the corresponding documents in the EU. Such laws speak about the necessity of registering the placement of security tokens
, which creates a limitation to their transfer, which, on the other hand, contributes to investor's protection.
Utility tokens have a significantly lighter regulation policy. Their key regulation moment lies in passing the Howey test, determining whether the given utility token is a security. If the token is recognized as a security, it means that it is now regulated as one. Still, if you have a legal opinion that your token isn't, it makes the token implementation process much more manageable. Most countries don't have strict regulations regarding utility tokens except KYC (Know Your Client) and AML (Anti Money-Laundering).
With the development of cryptocurrency and blockchain technologies, more countries create additional regulations for UT. For example, if your company's jurisdiction is the US, pay attention to the Howey test and the Bank Secrecy Act. It classifies UTs and their issuing in most of the states as money transmission service, due to which it's necessary to acquire a license in most states and implement the strict regulations. Because of such a rule, the UT issuers attempt to avoid the United States as a jurisdiction in general - all as a result of high regulating demands. Nevertheless, there is still hope left for American issuers: the government is planning on reviewing the digital securities legislation, which will free the utility tokens from the bank secrecy act jurisdiction, and will introduce the separate one, designated specially for UTs.
The rest of the countries usually implement much simpler regulations, which are mainly about issuers having to create the basic disclosure of the investor's information. For instance, according to the newest legislation offered in Europe (MiCA), business owners may issue utility tokens without getting the regulator's approval. Still, along with this, they'll have to prepare the paper giving all the necessary information for the investors.
There is a different kind of utility token - the payment tokens, explicitly used as a payment method. They can fall under the jurisdiction of electronic money legislations. A good example would be Libra, Facebook's cryptocurrency project, which is attempting to acquire licenses regarding payment methods.
Speaking about non-fungible tokens, there isn't yet any regulating paper regarding them as they still are a brand new instrument. Still, there are passionate discussions about their qualification: for example, if the NFT is fractionalized, the smaller tokens acquired may be seen as securities.