Towards a Token Classification Standard — Comparing the Frameworks of ITSA and IWA

Thousands of different types of tokens have emerged in the last years and along with them an overwhelming amount of terms such as crypto asset, security token, digital asset, cryptocurrency or coin started to circulate. Standardization is required to provide clarity. Authors: Stefan Schmitt, Thomas Faber

The International Token Standardization Association (ITSA) aims at promoting the development and implementation of comprehensive market standards for the identification, classification and analysis of DLT- and blockchain-based cryptographic tokens. However, other initiatives promote similar goals. In this article, we compare ITSA’s International Token Classification (ITC) framework and the InterWork Alliance’s (IWA) Token Taxonomy Framework (TTF):

The outcome — both classify tokens, however, from different perspectives and therefore rather complement each other instead of being competition. While the TTF provides a draft specification library, frameworks for the creation of tokens, the ITC provides a technical classification, information on the economic purpose and industry as well as legal classification of existing tokens.

More than 1,000 crypto assets have emerged in the last year alone. If you are new to the crypto sphere, you must be overwhelmed by the enormous amount of circulating terms and definitions. But even if you are a blockchain enthusiast, terms like “cryptocurrency”, “stablecoin”, “security token”, “utility token”, “digital asset” etc. frequently cause confusion as their meaning often overlaps and unambiguous definitions are missing. There is a clear requirement for a unified approach on how to categorize and treat these assets in order to make well-informed investment decisions. Business, technical, and regulatory stakeholders need to speak the same language to effectively work together for the good of the ecosystem.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification and analysis of DLT- and blockchain-based cryptographic tokens. However, other associations such as the InterWork Alliance (IWA) pursue similar goals in regards to token classification standards. This article compares the token classification frameworks of ITSA and the IWA, and demonstrates that both initiatives approach the topic of token classification from different but complementing angles.

ITSA’s International Token Classification Framework

The International Token Classification (ITC) is a holistic standard framework for the classification of DLT- and blockchain-based cryptographic tokens according to their inherent characteristics. The first version of the ITC has already been applied to more than 800 cryptographic tokens and seeks to provide more clarity as well as transparency for all market stakeholders involved. It follows a synoptical design based on the current research landscape as well as existing best-practices and builds on a flexible and extendable 360-degree approach, which employs different dimensions to describe a token’s properties.

The ITC follows a descriptive approach scanning the market and screening already existing tokens. These tokens are analyzed regarding their characteristics which are reflected in the classification hierarchy: Dimension, category, sub-category, group and sub-group.

In its first version, the ITC covers economic (E), technological (T), and legal (L) aspects of DLT- and blockchain-based cryptographic tokens in four dimensions (see Figure 1).

Figure 1: Breakdown of the first four dimensions of the International Token Classification (ITC)

Dimension 1: Economic Purpose (EEP)

The first dimension is constituted by the Economic Purpose of the token and asks for the token’s raison d’être from the issuer’s perspective. The dimension currently comprises three major categories: Payment Tokens (EEP21), Utility Tokens (EEP22) and Investment Tokens (EEP23). Payment Tokens are defined as tokens that are primarily created for the use as digital currencies that are not limited to a specific environment (e.g. a specific platform, online shop or ecosystem). As such, the ITC category Payment Token (EEP21) captures many cryptographic tokens, which are currently widely considered as cryptocurrencies (e.g. Bitcoin or XRP), yet excludes others that are perceived as cryptocurrencies by the wider public but have not been created with the sole purpose of functioning as a means of payment (e.g. Ethereum or EOS). Since “cryptocurrency” is a collective term for all sorts of tokens and lacks clear definition, the ITC foregoes to use it completely. The category Utility Token (EEP22) comprises all types of tokens that are created to provide any sort of utility within a predefined environment (e.g. access to services or products, transaction settlement, governance functions, or ownership management). Consequently, the ITC category of utility tokens is very diverse and often features tokens that possess more than one utility attribute. In these cases, the token is for now classified according to the most important characteristic (e.g. Ethereum and EOS are classified as utility settlement tokens due to their major function as means of transaction settlement within the Ethereum and EOS ecosystems). Investment Tokens (EEP23) represent cryptographic tokens that serve as means of investment to the token holder (e.g. equity, debt or derivative tokens). In current market language most of these tokens are likely to be labelled as “security tokens”. However, in contradiction to current market practice, ITSA refrains from labelling such tokens as security tokens in this dimension, since the term is not focussing on the economic purpose of a token but on its regulatory status. Moreover, since many jurisdictions have no proper ruling yet on what is to be considered a security token, and since the ITC is designed to be applicable globally and regardless of any specific jurisdiction on which a regulatory status is always dependent, the first version of the ITC does not cover the regulatory status of cryptographic tokens at all. The idea is to add further dimensions focusing on the regulatory status of cryptographic tokens in various jurisdictions in future versions of the ITC whenever there is regulatory clarity. This approach also allows for the classification of tokens as security or non-security tokens independent of their classification according to their Economic Purpose, which is important since some regulators might not only consider Investment Tokens but also certain Utility Tokens or even Payment Tokens as securities.

Dimension 2: Industry (EIN)

The industry that a token is intended to be used in by the issuer represents the second dimension of the ITC. The dimension’s categories are rather broad and generic since they are based on the North American Industry Classification System (NAICS) for facilitated adoption and comparability. The sub-categories, however, are designed according to the characteristics of the global token economy and allow for improved differentiation between cryptographic tokens with regards to their specific fields of use. By default, Payment Tokens and Investment Tokens would be assigned for instance to the industry category Finance and Insurance (EIN10) and the respective industry sub-categories Payment Services (EIN10A) and Investment Services (EIN10D). Yet, since this allocation does not add any significantly new information beyond what is already covered in the dimension Economic Purpose (EEP), Payment Tokens and Investment Tokens can also be reassigned to other industries where appropriate. This could be the case for example, where a Payment Token is intended to serve as currency in esports and thus is reassigned to the industry sub-category Entertainment and Gaming (EIN17B). Moreover, for debt and equity tokens the industry of the company issuing debt or equity is usually considered as the industry of the token.

Dimension 3: Legal Claim (LLC)

The type of legal claim, which a cryptographic token does entitle its owner to, forms the third dimension of the ITC framework. This dimension can be regarded as a preliminary step to future ITC dimensions on the regulatory status of a cryptographic token in various jurisdictions, as the analysis of the rights, which a token provides its owner with, mostly forms part of any regulatory assessment. The dimension features three categories: No-Claim Tokens (LLC31), Relative Rights Tokens (LLC32) and Absolute Rights Tokens (LLC33). While a No-Claim Token does not entitle its owner to any other right than to the token itself, a Relative Rights Token provides certain rights against at least one natural or legal counterparty (e.g. the right to the payment of interest and principal by a third party in case of a Debt Token, or the specified right to access and use a certain platform run by a third party in case of an Access Token). An Absolute Rights Token provides its owner with a right that is not dependent on a third party but exists independently. For instance, ownership rights in intellectual property are an absolute right, which can be managed and transferred through an Absolute Rights Token. In general, most cryptographic tokens currently on the market are No-claim Tokens due to the decentralized nature of their ecosystems and the lack of a third party that a claim could be raised against. Moreover, most jurisdictions currently still do not allow for the management and transfer of absolute rights through blockchains.

Dimension 4: Technological Setup (TTS)

The Technological Setup, as fourth and currently last dimension of the ITC, describes the technological properties of a cryptographic token and asks for the level of its implementation. The ITC differentiates between two major categories: Ledger-Native Tokens (TTS41) and Non-Native Protocol Tokens (TTS42). The first category (TTS41) represents all tokens that are directly implemented on the blockchain orany other distributed ledger and hence function as an integral part of the respective ledger. For example, Bitcoin is a native token issued on the Bitcoin blockchain. By means of sub-categories, future versions of the ITC will also distinguish between the type of ledger that the token is implemented on (e.g. blockchain, directed acyclic graph (DAG), etc.). The second category (TTS42) comprises all tokens that are not created on the ledger-level but on the protocol-level on top of an existing blockchain or distributed ledger. Here, sub-categories differentiate between the type of protocols (e.g. ERC20). For example, the Basic Attention Token is a Non-Native Protocol Token that builds on the ERC20 standard protocol. The Technological Setup of a cryptographic token is not only an interesting dimension for academics and developers, but it is also an important parameter for its risk and value assessment.

IWA’s Token Taxonomy Framework

The Token Taxonomy Framework (TTF) aims to provide guidance and tools, in non-technical and cross-industry terms, for the composition and definition of tokens. For that, the IWA proposes a common set of concepts and terms as well as implementation-neutral token definitions. To help illustrate the value of using these concepts and definitions, the TTF provides sample specifications for bonds, emoney, original art and other concepts (see Figure 3).

The Token Taxonomy Framework applies a normative approach, gathering archetypes for tokens and providing blueprints for these archetypes. This approach is also highlighted in the official documentation, where it is stated that “Using the taxonomy when creating or defining an existing token should improve token implementations” (source p. 33).

Figure 3: Overview of the Token Taxonomy Framework Draft Specification Library

The TTF uses five characteristics: token type, token unit, value type, representation type and template type. Each concept is classified according to these characteristics meaning that, for example all bond tokens share these characteristics. The example of Emoney makes the framework more tangible (see Figure 4).

Figure 4: Draft specifications for Emoney according to the Token Taxonomy Framework (TTF)

The draft specification for Emoney classifies the token as a SingleToken in regard to the Template Type; the Template Type distinguishes between single or hybrid tokens. Furthermore, the Emoney Token Type is fungible, meaning there are many tokens of the same type; the opposite would be a non-fungible token. The Token Unit is fractional meaning that the token can be divided into smaller parts. The Value Type distinguishes tokens that have intrinsic value or reference value; Emoney has an intrinsic value, meaning it doesn’t reference any tokenized assets. The Representation Type of the Emoney token is common, meaning that all tokens are the same and interchangeable; in contrast, a unique token has its own identity and can have unique properties that can be traced.

The sample classification of the Emoney token by the IWA shows that the TTF classifies tokens in regard to their technical properties. We see the IWA as a powerful tool that provides a composition framework and toolset for developers to design tokens from scratch, as well as sample archetype blueprints that developers can modify, with the intent of producing token specifications that focus on the technical characteristics of the token.

Comparison of the ITC and TTF through the example of a tokenized bond

The similarities and differences between both frameworks can best be described using an example, the classification of a bond. The comparison is shown in Figure 5.

Figure 5: Differences and intersections between ITC and TTF

According to the ITC, a bond is classified as an Investment Token (category) and more specifically as a Debt Token (sub-category), as the issued token is intended to be used as a financial debt instrument similar to classical capital market instruments. The Industry classification relies on the issuer’s industry, e.g. a Debt Token issued by a marketing agency would be classified as a token within the Information industry (category), more specifically Marketing & PR (sub-category). The technological setup relies on the blockchain technology used. Many Investment Tokens are issued on the Ethereum Blockchain, using for example the ERC20-Standard; these tokens are classified as Non-Native Protocol Tokens (category) and more specifically as ERC20 Token (sub-category). Finally, a debt token is classified as a Relative Rights Token (category) as it provides its owner with a claim against a natural or legal counterparty and thus with relative rights towards a third party (e.g. the right to receive a payment from the counterparty, the right to receive access to a service offered by the counterparty or the right to vote within the environment established by this counterparty).

According to the TTF at hand, a “bond” is one of the archetypes provided. The Token Type of a bond token is “Fungible”, meaning that tokens have interchangeable value with one another, where any quantity of them has the same value as another equal quantity if they are in the same class or series. The Token Unit is “Whole”, meaning that there can be many instances of this token, but they cannot be subdivided. The Value Type is classified as “Reference”, meaning that this token is a receipt or title to a material item, property or right. The value is referenced and the token represents it and can be owned or used digitally via its token. The Representation Type is “Common”, meaning that this token is simply represented as a balance or quantity attributed to an owner address where all the balances are recorded on the same balance sheet, like a bank account. All instances can easily share common properties and locating them is simple.

Using this example, differences and intersections between both frameworks become apparent. For example, many ERC-20 Tokens are fungible. This means that in this case, the Technological Setup dimension of the ITC captures this information and ITC’s dimension and TTF’s characteristic overlap. However, this is not always the case. The same is true for the Legal Claim dimension and TTF’s Value Type. A Relative-Rights Token such as a bond has a reference, the underlying bond. Therefore, in this case, both frameworks overlap again. This is not necessarily always the case.


In comparison, the TTF provides a classification hierarchy for tokens that captures the tokens’ inherent technical characteristics and properties (token type & unit, value, representation and template type). Hence, IWA and ITSA share the goal to classify tokens but with a very different approach:

The TTF provides draft specifications for various archetypes of tokens regarding their intended use, e.g. bonds, original art, royalties etc. Therefore, it is a great starting point for everyone that wishes to create a token and needs guidance on the technical characteristics and intends to create the token according to a recognized framework.

The ITC, however, focuses on existing tokens and analyzes and classifies them. Therefore, while both initiatives share the goal of standardized token classification, they tackle the topic from opposite directions. The ITC applies a descriptive approach, whereas the TTF applies a normative approach.

ITSA currently assesses the TTF among other frameworks with the aim to adjust the ITC in order to allow for enhanced comparability and compatibility between frameworks. The ITC’s technological dimension allows ITSA to expand its framework to capture the technical properties in a way the TTF does today (See Figure 6 for the example of a hypothetical application). Both frameworks complement each other more than they are in direct competition.

Figure 6: Hypothetical implementations of TTF’s characteristics into the ITC

TTF’s Token Type and Token Unit characteristics belong into the technological dimension, as they classify a token regarding its technological setup. TTF’s Value Type and Representation Type characteristics can be integrated into the legal dimension of the ITC, as they provide further information. For the ITC framework, ITSA follows an open and flexible approach, always aiming to expand the framework to capture each token’s characteristics on several dimensions and with that provide clarity about the token for researchers, investors and financial authorities.

For more information about ITSA and its projects we recommend the article “Market standards for the global token economy” (ITSA, 2019).


If you like this article, we would be happy if you forward it to your colleagues or share it on social networks. More information about the International Token Standardization Association can be found on the Internet, on Twitter or on LinkedIn.


Stefan Schmitt is a project manager at the International Token Standardization Association (ITSA) e.V. Next to his work on a Horizon 2020 project by the European Commission as a research fellow for the Frankfurt School Blockchain Center (FSBC) and being the project lead of the Frankfurt School Blockchain Academy, he is consulting several blockchain startups ranging from custody over payments to infrastructure. Mr. Schmitt holds a Master in Finance (M.Sc.) from Frankfurt School of Finance and Management. You can contact him via email ( or on LinkedIn.

Thomas Faber is a research fellow at the Frankfurt School Blockchain Center and a project manager at the International Token Standardization Association (ITSA). He holds a B.Sc. degree in Management, Philosophy & Economics as well as an M.Sc. degree in Management with a focus on digital business models from the Frankfurt School of Finance & Management. You can contact him via email and LinkedIn.

About and contacts

About the International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not for profit association based in Berlin that promotes the development and implementation of comprehensive market standards for the identification, classification, and analysis of cryptographic tokens. ITSA has over 100 international, associated founding members from various interest groups, including industry associations, banks, stock exchanges, startups, universities, law firms, and industrial enterprises.

Press contact
Stefan Schmitt, Project Manager

About the InterWork Alliance (IWA)

The InterWork Alliance (IWA) is a non-profit, member-led organization representing both business and technical expertise based on real-world projects and requirements. Our global membership is made up of leaders, adopters, innovators, developers, and businesses working to define interworking standards representing the best practices for every use case the token-powered ecosystem has to offer. It will drive business-level interoperability, multi-party interchange and trust by platform-neutral when defining tokenization standards that deliver value across applications and networks.

Press contact
Jessie Hennion, Director of Public Relations


The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.

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