The regulatory landscape for tokenisation projects has evolved significantly, offering both new opportunities and challenges. Tokenisation is revolutionising asset ownership and liquidity, offering new opportunities across financial markets.
However, navigating the legal complexities is crucial to ensuring long-term success. After establishing governance, the next step is to comply with the regulatory requirements in the jurisdictions where you operate.
This guide provides an updated overview of key legal considerations for launching a tokenisation project.
Regulatory Landscape
The regulatory environment for asset tokenization has matured considerably since 2024:
United States: The SEC and CFTC have refined definitions for tokenised assets, distinguishing between utility tokens, asset-backed tokens, and securities. This clarification has significant implications for issuers regarding securities registration requirements.
European Union: The MiCA (Markets in Crypto Assets) framework provides comprehensive guidelines for the classification, issuance, and trading of tokenized assets.
United Arab Emirates (UAE): The Securities & Commodities Authority (SCA) has introduced a new Security Token Regime for the issuance and trading of security tokens and commodity token contracts developed on distributed ledger technology (DLT).
Selecting the Right Jurisdiction
Not all jurisdictions have clear or supportive regulatory frameworks for tokenised assets. Selecting a legally secure jurisdiction is essential for mitigating risks and ensuring compliance. When choosing a jurisdiction for token offerings, consider:
Regulatory Clarity - Jurisdictions like Singapore, Switzerland, and the UAE now offer more defined legal frameworks for tokenised assets.
Government Support - Many countries, particularly in the APAC region, are leading in regulatory sandboxes and initiatives supporting tokenization projects.
Compliance Requirement - Enhanced AML and KYC processes are now mandated in many jurisdictions, particularly in the US and EU.
Legal Entity Considerations
The choice of legal entity affects tax obligations, liability structures, and the ability to attract institutional investors.
Common Legal Structures
Corporations - Suitable for projects with centralised governance and investor-focused tokenisation models.
Foundations - Frequently used for DAOs and decentralised projects, offering a legal wrapper for governance.
Limited Liability Companies (LLCs) - A flexible structure suitable for hybrid tokenisation models.
Legal Considerations for Community Governance
For decentralised projects, community governance plays a crucial role in decision-making and project execution. Choosing the right jurisdiction for community operations ensures legal protection and regulatory compliance.
Key Considerations
Tax Treatment of Community Rewards - Some jurisdictions impose capital gains or income tax on token incentives.
Employment & Contractor Laws - If contributors are compensated, local labour laws may apply.
Key Steps to Launch an RWA Tokenisation Project Legally
Step 1 Conduct Regulatory Due Diligence
Engage legal experts to assess regulatory requirements in target jurisdictions.
Step 2 Draft Comprehensive Legal Documentation
Develop legally compliant Terms of Service, Privacy Policies, and Token Offering Memorandums.
Step 3 Obtain Necessary Licences
Secure financial services or securities issuance licences where required.
Step 4 Ensure Smart Contract Compliance
Conduct smart contract audits to align with legal standards and security best practices.
Step 5 Formalise Community & Governance Structures
If operating as a DAO, establish a legal entity or smart contract-based governance framework.
Main Compliance Requirements
Securities Regulations - Many jurisdictions now classify certain tokens as securities, requiring compliance with existing securities laws.
AML/KYC Compliance - Robust anti-money laundering and know-your-customer procedures are mandatory, with increased focus on automated identity verification and real-time monitoring systems.
Data Protection and Privacy - Compliance with data protection laws like GDPR is essential, especially when handling personal data of token holders.
Smart Contract Legality - Many jurisdictions now recognize smart contracts as legally binding, subject to certain requirements for clarity and dispute resolution.
Tax Compliance - Tokenisation projects must consider transaction-based tax obligations, capital gains, and income from fractional ownership structures.
Emerging Trends and Considerations
Interoperability
Regulators are encouraging interoperability among blockchain platforms to ensure transparency and ease cross-border transactions.
Regulatory Sandboxes
More jurisdictions are offering sandbox environments to test tokenisation platforms under controlled conditions.
Investor Protection
There's an increased emphasis on thorough investor protection measures, including detailed financial and risk disclosures.
Cross-Border Regulations
International regulatory bodies are working towards compatibility to streamline compliance and enable cross-border asset tokenisation.
Conclusion
The 2025 regulatory environment for tokenisation projects offers more clarity but also presents new challenges. While opportunities for innovation and growth are significant, navigating the complex regulatory landscape requires careful planning and expert guidance. Financial institutions and project developers must stay agile, adapting to rapid regulatory changes while maintaining robust compliance standards.
As the tokenisation market matures, collaboration between innovators, traditional financial institutions, and regulators will be key to fostering a sustainable and compliant ecosystem for tokenised assets.
If you are considering an RWA tokenisation project, contact our team of legal and blockchain experts for tailored guidance.
