Security (legal sense)
A financial instrument that falls under investor-protection law, which forces whoever sells it to register the offering or qualify for an exemption.
In United States law, security is a legal category rather than a description of technology, and the list in the securities statutes includes the open-ended term investment contract. If a token is offered and sold as an investment contract, the seller takes on registration and disclosure duties, and the firms that trade it may need broker-dealer or exchange registration. The consequences are procedural rather than moral: being a security means a specific rulebook and a specific regulator apply. Readers meet the question in enforcement actions, in exchange delisting notices, and in disclosure language explaining why a token is unavailable in certain jurisdictions.
En pratique
The governing test comes from the 1946 Supreme Court case SEC v. W. J. Howey Co., which concerned contracts to tend and market citrus groves in Florida rather than anything financial in the modern sense.
Le malentendu courant
That a token is permanently and inherently either a security or not, when the analysis turns on how the asset is offered and sold, so the same token can be distributed in ways that do and do not create an investment contract.