Asset tokenisation – hurdles to success:
24/10/2024
Asset tokenisation, which involves converting ownership rights of an asset into digital tokens on a blockchain, faces several barriers that include:
- Regulatory Compliance:
- Different jurisdictions have varying regulations regarding tokenised assets.
- Legal Recognition:
- Many legal systems do not yet recognise digital tokens as valid representations of ownership.
- Custody and Ownership:
- Ensuring secure custody of the physical assets and clear legal ownership represented by the tokens is complex.
- Smart Contract Integrity:
- Smart contracts, which automate the execution of token transactions, must be free of bugs and vulnerabilities to avoid legal disputes.
- Privacy and Data Protection:
- Compliance with data protection laws like GDPR is essential, especially since blockchain transactions are transparent and immutable.
- Taxation:
- The tax implications of tokenising and trading assets can vary significantly by jurisdiction, adding another layer of complexity.
- Market Liquidity and Demand:
- The success of the tokenisation process depends on ensuring sufficient market demand and liquidity for the tokenised asset.
These barriers highlight the need for a robust legal framework and clear regulatory guidelines to facilitate the widespread adoption of asset tokenisation.
Source:
(1) Tokenization of Real-World Assets: Legal Challenges and Considerations. https://www.prokopievlaw.com/post/tokenization-of-real-world-assets-legal-challenges-and-considerations.
(2) What Is Asset Tokenization? Meaning, Examples, Pros, & Cons .... https://www.britannica.com/money/real-world-asset-tokenization.
- Legal Recognition:
- Custody and Ownership:
- Smart Contract Integrity:
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As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.