Tokenisation Legal Support

Tokenisation Legal Support

We believe that tokenisation is something that will really shake things up in the nearest future and closely watch all the latest approaches and frameworks enabling this process to become more efficient and secure.

The Challenges of Tokenisation Industry

As the matter of fact, not many countries have yet developed legal frameworks for tokenisation, which means that ‘on chain’ operations with tokenised assets might still be non-binding and need to be mirrored ‘off chain’ to be legally valid.

For example, in order to transfer tokenised equity a person, in addition to the ‘on chain’ transfer of token, might need to sign a classical equity purchase agreement, apply for the registration of such transfer with state registrars or even visit a notary in person.  

Another issue that is faced by the tokeniser is how to legally tie the token issued to the underlying asset, as well as how to ensure the legal and physical security of the tokenised asset itself. Therefore, reliable tokenisation will remain unattainable in the absence of complex legal advice and support.

Complex Legal Advice and Support for Tokenisation

The above is a precise reason why projects should approach the tokenisation carefully. We are convinced that the tokenisation procedure must always commence with the legal analysis of the underlying asset and structuring of the project, which, if done correctly, will allow the project to mitigate most of security risks and keep nearly all, if not all, operations ‘on chain’.

The desired outcome may be achieved through the preparation of comprehensive legal documents to support the tokenisation procedure, as well as through structuring the project in jurisdictions that provide for efficient tokenisation frameworks. We further help the client to involve appropriate technical solution providers and financial intermediaries (e.g. broker-dealers), if required, and establish procedures for managing the life-cycle of security token and tokenised asset.

Tokenisation Use-Cases

Nevertheless, tokenisation is not popular for all types of assets, however, the list of use-cases is constantly growing. As of today, the following asset classes could be tokenised the most effectively:

equity, stock, shares real estate
profit participation notes intellectual property rights
depositary receipts commodities
derivatives precious metals
convertible loans and instruments media content, books, films, pieces of art
bonds royalties
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