The Swiss Distributed Ledger Technology (DLT) Act, which took effect on February 1, 2021, has established a robust and forward-looking legal framework for asset tokenization. Designed with technology-neutral principles, the Act does not mandate the use of blockchain specifically, yet it addresses the distinct needs of distributed ledger technologies.
The centerpiece of the DLT Act is the ledger-based security, a new form of uncertificated security represented by an entry in an electronic register. This innovation has opened new opportunities for managing and trading tokenized assets in a secure, efficient, and legally recognized manner.
To learn more about our services and how we can assist you with tokenization, reach out to us at [email protected]
Key Legal Requirements
For ledger-based securities to comply with Swiss law, they must satisfy three critical requirements:
- Power of Disposition:
The holder must maintain full control and the ability to dispose of the security, akin to the ownership rights associated with physical chattels. - Integrity:
The ledger must accurately reflect the legal situation and be protected against unauthorized alterations or modifications. - Transparency:
The ledger must clearly document the right, its holder, and the registration agreement, enabling all relevant parties to independently verify entries.
Rights and Tokenization
Under Swiss law, certain rights may be tokenized into ledger-based securities. These include contractual rights recognized under company law. However, personal property rights, such as movable property or chattel rights in common law, generally cannot be tokenized, except in specific cases like mortgage certificates or commodity papers.
What is Tokenization?
Tokenization refers to the process of converting the rights or ownership of tangible or intangible assets into digital tokens recorded on a blockchain or distributed ledger. These digital tokens enable the secure management and transaction of assets in a fully digital ecosystem.
Eligible Assets for Tokenization
A wide range of assets is eligible for tokenization, offering opportunities across various industries:
- Financial Assets: Shares, bonds, commodities, and structured products.
- Real Estate: Commercial and residential properties, land, and real estate development projects.
- Collectibles & Art: Fine art, rare books, vintage cars, and luxury goods.
- Infrastructure: Energy facilities, transportation systems, and communication networks.
- Data: Personal data, financial data, and energy data.
- Entertainment & Gaming: Intellectual property, esports platforms, and digital art.
Benefits of Tokenization
Tokenization provides numerous advantages that are transforming industries worldwide:
- Enhanced Security and Fraud Prevention:
By replacing sensitive information with tokens, tokenization enhances data security and mitigates fraud risks. - Increased Accessibility and Liquidity:
Fractional ownership enables smaller investments, making assets accessible to a broader audience and enhancing liquidity in traditionally illiquid markets. - Efficiency and Cost Savings:
Tokenization eliminates intermediaries, reducing transaction times and costs. - Transparency and Trust:
Every transaction is securely recorded on the blockchain, fostering transparency, reducing fraud, and enhancing trust among participants.
Why Switzerland for Tokenization?
Switzerland stands out as a premier jurisdiction for tokenization due to its exceptional legal and business environment. Key advantages include:
- Strong Legal Protections: Robust investor protection laws ensure the security and reliability of tokenized assets.
- Political Stability: Switzerland’s neutrality and stability make it an attractive destination for global investors.
- Established Financial Institutions: A long-standing reputation for excellence in banking and finance.
- Blockchain Leadership: Switzerland’s proactive adoption of blockchain technology has created a secure, predictable, and innovation-friendly legal framework.
Our Expertise in Tokenization
Our Swiss-based team comprises seasoned lawyers, bankers, and auditors who offer global expertise in asset tokenization. Whether you need assistance with regulatory compliance, structuring tokenized assets, or navigating legal complexities, we provide tailored support for your needs.
Contact Us
To learn more about our services and how we can assist you with tokenization, reach out to us at [email protected]. Let us help you harness the full potential of tokenization within a secure and compliant framework.
