3. Selecting Underlying Asset Class
What's inside
Before tokenizing an asset, it is important to categorize it into a specific asset class. An asset class is a group of financial or physical assets that share similar characteristics, behave similarly in the market, and are subject to similar regulations.
By selecting the correct asset class, you:
Ensure compliance with legal and financial regulations.
Understand how the asset is valued and traded.
Determine the appropriate tokenization structure.
Some asset classes, like real estate or commodities, represent physical assets, while others, like stocks or bonds, are financial instruments. Each has its own rules for ownership, valuation, taxation, and compliance, all of which affect how they can be tokenized.
What is an Asset Class?
An asset class is a category of assets that behave similarly in financial markets. For example:
Real estate generates income through rent and appreciation.
Stocks and bonds represent financial investments that generate returns.
Commodities (like gold or oil) are traded globally with values tied to supply and demand.
Why It Matters
Helps investors understand risk and return expectations.
Determines the legal framework and valuation model for tokenization.
Ensures compliance with securities laws and financial regulations.
Different asset classes have unique ownership structures, valuation models, and regulatory considerations. Identifying the correct asset type ensures proper tokenization structuring.
Identify the Correct Asset Class
Different underlying asset classes have unique ownership, valuation, and compliance requirements. Identifying the correct category ensures proper token structuring.
Real Estate
Residential Real Estate
Commercial Real Estate
Land
Agricultural Land
Urban Land
Commodities & Resources
Precious Metals (Gold, Silver, Platinum)
Energy Resources (Oil, Gas, Renewables)
Base Metals (Copper, Nickel, Aluminum)
Agricultural Commodities (Wheat, Corn, Coffee)
Industrial Commodities (Timber, Rubber, Chemicals)
Securities & Bonds
Public Securities (Stocks, ETFs)
Private Securities (Equity in Private Companies)
Corporate Bonds
Government Bonds
Intellectual Property & Royalties
Patents
Copyright
Royalties (Music, Film, Software)
Natural Resource Royalties
Collectibles & Alternative Assets
Art
Gemstones
Cars
Business & Financial Assets
Business Revenue (Future Cash Flows, Profit Sharing)
Accounts Receivables (Outstanding Invoices)
Inventory (Stored Goods, Commodities Reserves)
Each asset class requires specific documentation to prove ownership, valuation, and compliance with tokenization requirements.
Why This Step is Important
Ensures Legal Compliance – Tokenization rules vary based on asset type and jurisdiction.
Defines Ownership Rights – Different assets grant investors ownership, dividends, or revenue-sharing.
Affects Valuation & Returns – Real estate appreciates differently than stocks, bonds, or commodities.
Impacts Marketability – Some assets (like stocks) are more liquid than others (like real estate).
How to Complete This Step
Step 1: Identify the correct asset class from the list.
Step 2: Gather legal proof of ownership, such as contracts, deeds, or shareholding records.
Step 3: Verify that the asset is recognized in its jurisdiction and follows tokenization laws.
Step 4: Record the asset class in your system for regulatory and structuring purposes.
Example: You want to tokenize a gold reserve stored in Switzerland.
You classify the asset under Commodities – Precious Metals.
You verify ownership with warehouse receipts and storage contracts.
You confirm that Swiss laws allow digital ownership of gold-backed tokens.
You now have a legally verified, investor-friendly tokenized asset.
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