[Webinar] Navigating Regulations and Legalities in Real-World Assets (RWAs)

InvestaX Legal Team

Regulatory uncertainty is one of the main concerns of investors entering the digital asset market. First of all, the types of regulations that would apply to RWA tokens would vary depending on the type of structure that's being deployed.

RWA tokens are part of the digital asset landscape. They can be classified as securities or not. Determining whether a tokenized RWA is treated as security boils down to:

The asset being tokenized
The token’s structure
The regulatory definition at play, which varies by country

So, in the RWA space, what's classified as securities and what's not?

The predominant structure is indirect tokenization, where the RWA is placed under the ownership of an entity and the entity is then tokenized and issued through a pooling of funds from multiple investors, giving investors indirect interests in the underlying RWA. These tokens should be regarded as securities.

Another type of structure that exists is one where RWAs are tokenized directly and typically aren't considered securities. But this structure appears to be less common because of issues such as impracticability, non-fungibility, lack of regulatory clarity and limited use cases.

For non-securities RWA tokens, their regulatory regimes remains largely undefined in many jurisdictions.
As for RWA tokens that are considered securities, the tokens and related intermediaries (e.g., tokenization advisers, tokenization platforms, trading platforms, and custodians) are subject to securities regulation to ensure market integrity and investor protection.

For Real World Asset Tokens (RWA) owners and token issuers, navigating these complexities requires a deep understanding of token structures and legal definitions.
For tokenization platforms like InvestaX, protecting both issuers and investors are our core focus, that is why we've taken the route that we all have in getting the requisite licenses and all of the segregation of duties.

Key takeaways from the webinar

The types of regulations that would apply to RWA tokens would vary depending on the type of structure that's being deployed, permissible investors, geographical location, and other factors.
Some countries adapt existing securities laws for digital assets, while others create new regulations to address digital assets.
Direct tokenization and indirect tokenization hold distinct pros and cons.