1. Introduction and Scope of Opinion

This opinion addresses the Zekret Protocol’s token, ZEEK, with a specific focus on whether it may be classified as a utility token under applicable regulatory frameworks, rather than as a security or other regulated asset class. This assessment considers the intended function, issuance, and distribution mechanisms of ZEEK within the Zekret ecosystem, as well as any anticipated secondary-market implications.

2. Overview of the Zekret Protocol and ZEEK Token

Zekret is a blockchain infrastructure project aimed at providing a compliant and secure platform for various digital asset activities, including institutional-grade nodes for stakeholders who contribute to the protocol’s ecosystem. The ZEEK token, as designed, serves multiple roles within this infrastructure:

• Ecosystem Participation: ZEEK acts as an access token, enabling users to participate in Zekret’s ecosystem activities, including accessing exclusive services, governance, and staking functionalities.
• Reward Mechanism: ZEEK incentivizes participants for various roles, including Watchtower, Gateway, Developer, and Ecosystem nodes, which align with Zekret’s decentralized infrastructure goals.
• Refilling Reserve and Foundation Stability: Through a structured reward distribution system, ZEEK supports long-term protocol stability by allocating rewards to maintain reserves, critical to ecosystem longevity.

This multi-functional role underpins Zekret’s decentralized infrastructure, offering utility across the protocol without conveying ownership or profit rights traditionally associated with securities.

3. Regulatory Framework Analysis

A. Definition of a Utility Token

Within various regulatory guidelines, such as the European Union’s Markets in Crypto-Assets Regulation (MiCA) and U.S. Securities law (e.g., Howey Test), utility tokens are typically characterized by their use within a specific platform or ecosystem. Utility tokens generally do not represent an investment in an enterprise but instead serve as a method to access specific goods, services, or functions within a platform.

B. Securities Classification Analysis

1. Investment of Money: Although ZEEK may involve an exchange of value, its primary function is to access services and participate in the protocol. Zekret has taken measures to structure ZEEK’s role to avoid speculative investment characteristics.
2. Expectation of Profit: ZEEK holders do not receive dividends or similar profit-sharing benefits. Instead, ZEEK’s value is derived from its utility within the protocol rather than any right to profits.
3. Common Enterprise: ZEEK holders are not inherently part of a “common enterprise” seeking profits but are more accurately users of Zekret’s services.
4. Efforts of Others: The token’s utility value is based on user engagement within the protocol rather than reliance on third-party management efforts.

Given these criteria, ZEEK does not appear to fit the traditional definition of a security.

C. Classification under MiCA

Under MiCA, ZEEK would likely be assessed based on its utility within the Zekret platform rather than as an asset seeking external speculative investment. ZEEK’s designed use aligns closely with MiCA’s utility token definitions, supporting the argument for utility classification.

4. Conclusion