New HCCH Digital Tokens Project: Why study the private international law implications of the tokenised economy?
Yesterday the PB started its work on a new HCCH project, which examines the private international law issues relating to digital tokens (Digital Tokens Project).
Digital tokenisation allows tangible and intangible objects, rights and claims to be virtually represented and stored electronically, usually in decentralised or distributed storage mechanisms.
Tokenisation can be an enabler of fast and secure transactions, including transfers, tracking and management of tokenised value or rights across borders. This streamlines transactions, reducing the need for intermediaries and increasing the transparency and security of these transactions.
Three trends of note:
1️⃣ Digital tokenisation of real-world assets by:
- creating a virtual representation of existing tangible assets;
- storing these virtual representations on decentralised or distributed storage mechanisms (for example, using distributed ledger technology (DLT)); and
- conventionally embedding their value and any rights or obligations associated with the real-world asset in the virtual representation.
2️⃣ Fund tokenisation: where “digital funds” issue tokenised shares or units that represent investor interests, which are recorded and traded on distributed platforms rather than in the traditional registries or record-keeping systems. Such digital funds have gained traction in leading fund jurisdictions worldwide.
3️⃣ Identity management: publicly-visible, non-transferable tokens representing affiliations, memberships, and credentials, enabling a digital DLT wallet provide a digital method of representing a wallet holder’s location, personal identification, or affiliations.
These use cases of tokenisation raise private international law questions relating to the law applicable, which forum has jurisdiction, and the recognition and enforcement of claims and decisions that may arise in relation to such digital tokens.
The Digital Tokens Project will study these issues over the coming year, in partnership with relevant subject-matter experts identified by HCCH Members, as well as Observers.
Details on the Digital Tokens Project in the comments below.
HCCH - Hague Conference on Private International Law
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Doctoral Researcher, University of Ottawa
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