Asset tokens represent assets such as debt or equity i.e. promise a share in future company earnings or capital flows. Put differently, they act analogous to equities, bonds, or derivatives. Tokens that enable physical assets (real external economic assets) to be traded on blockchain are also asset tokens.
Asset token are treated as securities if it represents:
- a uncertificated security standardised and suitable for mass standardised trading i.e. any fungible claim or membership right; or
- a derivative i.e. the value depends on an underlying asset standardised and suitable for mass standardised trading
Asset tokens that are analogous to debt or equity (e.g. share of future earnings or capital flows) can trigger the prospectus requirements under FinSA.
Mere digitalised ownership of real economic assets does not usually trigger securities regulations.