Veto token circulating as legal tender (8)
I believe the answer is:
banknote
'legal tender' is the definition.
'veto token circulating' is the wordplay.
'veto' becomes 'ban' (banning is a kind of vetoing).
'circulating' is an anagram indicator.
'token' anagrammed gives 'knote'.
'ban'+'knote'='BANKNOTE'
'as' is the link.
(Other definitions for banknote that I've seen before include "Money" , "Paper cash" , "Monetary quantity" .)