Chained Assets - Research
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  • Intro to RWA
    • About This Module
    • RWA Introduction
      • Tokenization Process
      • Why RWAs: Bridging the Financial Gap
      • Why RWAs: State of Crypto and Imp. of RWAs in Crypto
      • Role of Regulations in Real-World Assets (RWAs)
      • Unique advantages for RWA developers
    • Regulations and Startups
      • Balance Between Innovation and Oversight in Emerging Industries
      • Impact of Restrictive Regulations on Blockchain
      • Good vs Bad Players
      • Investor Protection
    • US - Market & Regulations
      • Regulations in US
      • Exemptions in US
      • Table of Regulations
      • Conclusion
      • Other Important Regulations
  • Important Questions for Builders
  • RWA - Focus Areas
    • About This Module
    • Alternative Investments
      • Growth of Alternative Investments Market
      • Types of Alternative Investments
      • Pros & Cons
      • Due Diligence Process
    • Alt Asset 1 - Private Debt/Credit
      • Returns on Private Credit
      • Market Share & Growth of Private Credit
      • Types of Private Credit
      • Private Credit History
      • Important Terms
      • Working of Private Credit
      • Private Credit and Life Sciences
      • Important Metrics and Information points
      • Distressed Debt
      • Challenges faced by Industry
      • Use Cases for New Technology
      • Solutions/Ideas
    • Alt Asset 2 - Private Real Estate
      • Growth of Private Real Estate
      • Real Estate Fund Structures
        • Real Estate Syndication
        • Private Real Estate Fund
          • Fund Types
          • Creating a Funding
          • Closed vs Open ended Fund
          • Sponsor Compensation
        • Private RIETs
          • Setup Prive REIT
          • Important Terms
      • Comparison of Types
      • Important Terms
      • Important Metrics for Private Real Estate Funds
    • Alt Asset 3 - Private Equity
      • Growth in Private Equity Market
      • Types of Private Equity
      • Secondary Markets
        • Statistics- Secondary Markets
        • Top Secondary Market Players
    • Global & Innovative Distribution of Assets
      • Distribution of Assets
      • Consumer Stocks
      • Shareholder Perks
  • Legal
    • Asset Securitization
      • Structure: Traditional Securitization
      • RWA Project Examples with Partners
      • What is a SPV?
      • Role of SPVs in Securitization
      • Benefits of Asset Securitization
      • Structures of Asset-Backed Securities
      • Parties Involved In Securitization Process
      • Structuring the Transaction
    • Cayman Island - Orphan SPVs
      • Core Elements of an Orphan SPV Framework
      • How are Orphan SPVs formed?
      • Management of the Orphan SPV
    • Trusts
      • Key Components of a Trust
      • Trustee
      • Benefits to Investors/Shareholders
      • Examples of Trusts used by Web3 Funds
      • Unit Investment Trusts (UITs)
      • Delaware Statutory Trusts (DSTs)
      • FAQs
    • Global Regulatory Landscape
      • Switzerland
      • Luxembourg
      • Hong Kong
      • United Kingdom
      • Liechtenstein
      • Bermuda
      • British Virgin Islands
      • Cayman Islands
      • Jersey
      • MiCAR
  • MORE
    • Rubrics
      • Rubrics For Top Asset Types
      • SPVs Evaluation Rubric
      • Asset Originator Evaluation Rubric
      • Trusts Evaluation Rubric
      • FAQs
    • References
      • Regulations
      • Introduction
      • Alternative Investment
      • Trusts
      • Custodian
      • Securitization
      • REITs
      • Private Equity
      • Private Real Estate
      • Private Debt
      • Crypto Projects
      • Detailed Reports
      • DeFi Integrations
      • Global Distribution
      • Global Regulations
      • Private Credit - Borrowers
      • People
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  1. Legal
  2. Global Regulatory Landscape

United Kingdom

Important Aspects

Details about United Kingdom

Specific rules for asset issuance

Issuers must prove ownership of the underlying assets, include independent audits or proof of deposits, and provide clear terms for redemption. Custodianship details and risks such as potential insolvency must be disclosed. The financial promotion rules also apply, ensuring fairness, clarity, and transparency. They have categorized crypto assets into four types: security tokens , exchange tokens, utility tokens and NFTs.

Clarity over resale of assets

The UK provides clarity on the resale of crypto assets, requiring that any promotions for resale comply with the same financial promotion rules. The requirements include clear disclosure of risks, legal status of the assets, and all associated fees or charges. Resale of certain types of tokens, such as securities tokens, may require additional regulatory compliance depending on their categorization.

Trading of digital assets

Trading of digital assets, including their admission to trading venues, is regulated. Firms must comply with financial promotion rules and provide clear disclosures. The FCA requires that information on trading-related activities, including complex yield arrangements, meet standards for risk disclosure and transparency.

Custody of digital assets

Custody rules require firms to clearly disclose who holds legal and beneficial ownership of digital assets, including details of custodianship. For asset-backed tokens, firms must provide evidence of the custodian’s relevant permissions in the jurisdiction and disclose terms of the custody agreement. There must also be disclosure of risks, such as the insolvency of the custodian or issuer.

Dispute resolution

The UK's regulations emphasize the need for transparency and fairness in resolving disputes over digital assets. Firms must have systems and controls in place for handling disputes, including situations where asset ownership or rights are in question. If an asset's legal character is in dispute, the resolution may involve courts or regulatory intervention, depending on the circumstances.

Promotion of digital assets

The promotion of digital assets must be fair, clear, and not misleading, as per the FCA's rules. Issuers must conduct due diligence on stability claims, asset backing, and advertised rates of return. Promotions on social media require disclosure of commercial relationships, and any claims must be substantiated.

Process for asset issuance

Issuers need to file their financial promotions with the FCA. They must conduct due diligence, disclose risks, and provide proof of ownership for asset-backed tokens. For public offers, the use of the National Storage Mechanism (NSM) may be required. Issuers must follow guidelines on transparency and meet FCA’s standards. Issuers must file and publish an approved prospectus if they intend to offer transferable securities to the public, although a number of exemptions are available (e.g., public offers made to “qualified investors” or fewer than 150 persons).

Takeaways for VASP

  1. VASPs must comply with the financial promotion regime.

  2. Due diligence is crucial for verifying claims, especially for stablecoins and asset-backed tokens.

  3. Clearly disclose custody details and legal status of assets.

  4. Promotions on social media need to meet FCA rules.

  5. Prepare systems for consumer disclosures and risk assessment.

Takeaways for asset issuer

  1. Issuers must conduct due diligence and prove ownership of assets.

  2. Full disclosure of risks, custody, and redemption terms is necessary.

  3. Promotions must comply with FCA standards for fairness and clarity.

  4. Use the NSM for public offers and align with trading venue rules.

  5. Regularly review and update compliance to adapt to regulatory changes.

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Last updated 8 months ago