Aaron-XReg
commented
7 months ago Yes. I think tokenized RWAs would need to be explicitly excluded because they likely would be caught by the definition of virtual asset in the VASPA.
Open NotableVentures opened 7 months ago
Aaron-XReg
commented
7 months ago Yes. I think tokenized RWAs would need to be explicitly excluded because they likely would be caught by the definition of virtual asset in the VASPA.
FinalTwist
commented
7 months ago Can you walk me through this? So, if i were to sell my house, it would be done via lawyer/realtor (who are each bound by certain AML obligations).
BUT, if i tokenize my home and sell the tokens, then the tokens shouldn't have any obligations at all? Wouldn't this be a way to sell assets which otherwise are bound by obligations on sale to be sold without obligations?
What prevents me from tokenizing my home, and selling 100% of the tokens to one person in order to by pass the realtor/lawyer obligations?
NotableVentures
commented
6 months ago Happy to help illuminate. The NATURE of the asset on a blockchain is what matters most. If a token represents a security, it should be bound by securities rules; if a token represents ownership in real estate, it should be bound by rules of property transactions. To enable and support the digital transformation of traditional finance, it is important to distinguish between virtual assets (such as cryptocurrencies) and tokenized real world assets (RWA). There should be some clarity on the scope of VASP rules to ensure that securities, property, commodities, etc. are not ensnared in additional regulation, simply because they use blockchain technology.
On Fri, Mar 8, 2024 at 2:46 PM FinalTwist @.***> wrote:
Can you walk me through this? So, if i were to sell my house, it would be done via lawyer/realtor (who are each bound by certain AML obligations).
BUT, if i tokenize my home and sell the tokens, then the tokens shouldn't have any obligations at all? Wouldn't this be a way to sell assets which otherwise are bound by obligations on sale to be sold without obligations?
What prevents me from tokenizing my home, and selling 100% of the tokens to one person in order to by pass the realtor/lawyer obligations?
— Reply to this email directly, view it on GitHub https://github.com/MinistryFinancialServices/Virtual-Asset-Amendment-Consultation/issues/25#issuecomment-1986318892, or unsubscribe https://github.com/notifications/unsubscribe-auth/AJPN25E5ENQCHYULERR6QETYXIISZAVCNFSM6AAAAABEFWANB2VHI2DSMVQWIX3LMV43OSLTON2WKQ3PNVWWK3TUHMYTSOBWGMYTQOBZGI . You are receiving this because you authored the thread.Message ID: <MinistryFinancialServices/Virtual-Asset-Amendment-Consultation/issues/25/1986318892 @github.com>
FinalTwist
commented
6 months ago Happy to help illuminate. The NATURE of the asset on a blockchain is what matters most. If a token represents a security, it should be bound by securities rules; if a token represents ownership in real estate, it should be bound by rules of property transactions. To enable and support the digital transformation of traditional finance, it is important to distinguish between virtual assets (such as cryptocurrencies) and tokenized real world assets (RWA). There should be some clarity on the scope of VASP rules to ensure that securities, property, commodities, etc. are not ensnared in additional regulation, simply because they use blockchain technology. … On Fri, Mar 8, 2024 at 2:46 PM FinalTwist @.***> wrote: Can you walk me through this? So, if i were to sell my house, it would be done via lawyer/realtor (who are each bound by certain AML obligations). BUT, if i tokenize my home and sell the tokens, then the tokens shouldn't have any obligations at all? Wouldn't this be a way to sell assets which otherwise are bound by obligations on sale to be sold without obligations? What prevents me from tokenizing my home, and selling 100% of the tokens to one person in order to by pass the realtor/lawyer obligations? — Reply to this email directly, view it on GitHub <#25 (comment)>, or unsubscribe https://github.com/notifications/unsubscribe-auth/AJPN25E5ENQCHYULERR6QETYXIISZAVCNFSM6AAAAABEFWANB2VHI2DSMVQWIX3LMV43OSLTON2WKQ3PNVWWK3TUHMYTSOBWGMYTQOBZGI . You are receiving this because you authored the thread.Message ID: <MinistryFinancialServices/Virtual-Asset-Amendment-Consultation/issues/25/1986318892 @github.com>
Do you have any examples of how other jurisdictions are treating tokenized assets? What jurisdiction is "doing it right"? The issue here is that this appears to be a derivative - something that derives value from an underlying asset. A derivative is listed in schedule 2 of the securities investment business Act, meaning anyone who deals in these tokens could be in scope of the securities investment business Act.
The VASP Act also uses the exact definition of the financial action task force for what is a virtual asset: "“virtual asset” means a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include a digital representation of fiat currencies; "
So I guess the question as to whether or not tokens which represent a tokenized asset should be included in the VASP Act depends on whether or not such a token falls within that definition.
Is such a token;
As you can see, there is a very strong case here for tokens representing tokenized assets to be included in the VASP act. The VASP act embodies global standards (recommendation 15 of the FATF), so any deviation from that definition, or softening of that definition may have undue consequences for Cayman's reputation.
I would also purport that, since the definition of the VASP Act is based on the FATF's definition, that all countries will also include such tokens in their regulatory frameworks - at least in an anti-money laundering perspective.
Is my understanding mistaken? Happy to see any contrary arguments!
Comment
It is unclear whether Virtual Assets includes emerging Tokenized Real World Assets ("RWAs"), which are virtual representations of off-chain assets. Suggest these should be explicitly excluded: RWAs by definition are not inherently "virtual" since the underlying assets themselves exist in the meatspace. The underlying assets are covered by existing/other regulations.