Compliance & Licensing for Tokenized Assets
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Table of contents:
Issuing and managing tokenized assets requires strict compliance with financial, securities, and virtual asset regulations. The regulatory framework varies by jurisdiction, asset type, and the services provided in token issuance, trading, and custody.
A comprehensive compliance and licensing strategy ensures that issuers operate within legal boundaries, avoid regulatory risks, and build trust with investors.
Security Token Classification
If a tokenized asset represents equity, debt, or revenue-sharing rights, it is generally classified as a security and falls under securities regulations.
The issuance must comply with national financial laws such as Reg D, Reg A+ (U.S.), MiFID II (EU), FCA (UK), or MAS (Singapore).
Token Issuance Entity (SPV or Corporate Structure)
Security tokens are often issued through an SPV (Special Purpose Vehicle) or corporate entity to separate liabilities and ensure compliance.
The entity structure affects taxation, investor protection, and licensing requirements.
Investor Qualification & Reporting
KYC/AML (Know Your Customer & Anti-Money Laundering) compliance is required to prevent illicit activities.
Accredited investor verification may be required in certain jurisdictions for private placements.
Periodic financial reporting and disclosures are necessary to maintain compliance.
When a VASP or CASP License May Be Required
If the entity provides trading, exchange, or custody services for digital assets, a VASP license (or CASP license in the EU under MiCA) may be required.
If the tokenized asset is a security but is traded on a blockchain-based platform, additional crypto-asset regulations may apply.
When a VASP or CASP License May Not Be Required
If the token is issued under securities laws and does not operate as a virtual asset trading service.
If the issuer does not provide third-party exchange, custody, or financial intermediation.
Security token trading must comply with securities regulations based on whether tokens are traded on regulated exchanges, decentralized platforms (DEXs), or private markets. Issuers managing their own liquidity on a KYC/AML-enforced DEX may not require additional licensing, but secondary trading restrictions and regulatory interpretations vary by jurisdiction.
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