Step 7: Including Legal Status Documentation

Highly Recommended

Providing legal status documentation is an essential step in the tokenization process, as it confirms that the underlying asset complies with all applicable laws and regulations and that there aren't unaccounted claim on the property. These documents, such as zoning permits, compliance certificates, or business licenses, ensure the asset is legally eligible for tokenization. It's also important to verify that the asset is unburdened and isn't involved in any dispute at the moment, as that would compromise investors' claim on the asset By verifying the asset’s legal standing, issuers reduce the risk of regulatory violations and disputes, safeguarding the project’s credibility.

For investors, legal documentation provides clarity and confidence that the tokenized asset meets legal requirements and is free from undisclosed risks. Recording this information as metadata in the token’s smart contract creates a transparent, verifiable link to the asset’s legal status, ensuring trust and alignment with best practices.

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Why This Step is Important

• Demonstrates Compliance. Ensures the asset meets regulatory standards.

• Identifies Restrictions. Highlights any legal constraints or obligations tied to the asset.

• Provides Transparency. Builds confidence among investors and stakeholders.

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Action

1. Collect legal documents, such as:

   1. Zoning permits (for real estate).

   2. Compliance certificates (for securities).

   3. Licenses (for intellectual property).

2. Upload these documents and optionally include external links for verification.

3. Record the document reference as asset_legal_status_docs.

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