A utility token is intended to provide digital access to a good or service, available on a distributed ledger technology (DLT) such as a blockchain-based infrastructure, and can only be used in the issuer’s network. Ether is a typical example of a utility token.
A utility token must be distinguished from :
Security tokens: which are tokens that refer to a security and provide rights for example in the form of ownership rights and/or entitlements similar to dividends. For example, in the context of capital raising, asset tokens may be issued in the context of an Initial Coin Offering (ICO). Bitbond is a typical example of a security token.
Payment/exchange/currency tokens: often referred to as crypto-currencies typically do not provide rights but are used as a means of exchange (e.g. to enable the buying or selling of a good provided by someone other than the issuer of the token), for speculative purposes or for the storage of value. Examples of such tokens include Bitcoin or Ether.
Stablecoins are a relatively new form of payment/exchange token that is typically asset-backed (by physical collateral or crypto-assets) or is in the form of an algorithmic stablecoin (with algorithms being used as a way to stabilise volatility in the value of the token).
Source : IOSCO Final Report on Investor Education on Crypto-Assets (2020)