Fiat means it's backed by a state. The definition and etymology of the word makes it clear [1][2].

I wouldn't go so far as to say that fiat must have "actual utility" though. Being forced to use a currency in order to avoid prison time is more like extortion, rather than utility.

Crypto isn't fiat, though, in any case.

1. https://www.merriam-webster.com/dictionary/fiat 2. https://www.etymonline.com/search?q=fiat