Non-Fungible Assets
(NFAs)

The success of any blockchain business hinges on navigating the intricate regulatory landscape surrounding blockchain. With CoreLedger's Token Economy Operating System (TEOS), businesses can create NFAs with confidence while avoiding costly compliance violations.
non-fungible

The Importance of Regulatory Clarity for Blockchain Businesses

Regulatory clarity is essential for every successful blockchain business model. Given the increased scrutiny surrounding tokenization, regulators have developed frameworks that categorize tokens based on their similarities to financial products and currencies.

The Regulatory Implications of Token Categories

Security Tokens

  • Characteristics: Security tokens closely resemble financial products.
  • Regulations: They require stringent KYC/AML procedures.
  • Challenges: Security tokens are difficult to sell and typically cannot be listed on token exchanges. Their value is easily defined and calculated. As a result, they lack the price volatility and liquidity of other tokens.

Utility Tokens

  • Characteristics: Utility tokens have highly specific utility values that typically grant access to a single digital service that is not accessible with cash.
  • Regulations: They can be listed on exchanges and obtained without extensive KYC/AML procedures.
  • Value and Pricing: The value and price of utility tokens cannot be quantified easily and may be subject to VAT in some jurisdictions.

Payment Tokens

  • Characteristics: Payment tokens function as a form of currency for a variety of digital and non-digital services.
  • Regulations: They are often regulated like e-money, making them similarly challenging to list on exchanges.

The Complexity of Multi-Purpose Tokens

Many tokens either fall into grey areas or represent new, unique digital assets that do not fit neatly into any existing category. This complexity necessitates innovative solutions to meet any potential regulatory requirements while leveraging the benefits of blockchain technology.

CoreLedger’s Innovative Solution: NFAs

CoreLedger addresses the unmet needs of these unique and multi-purpose tokens through its invention of NFAs. In many cases, tokenization is used to digitize former paper-based processes as part of the broader movement toward digital transformation.

While not intended to create novel financial products, the use of state-of-the-art technology for tokenization often pushes these tokens into the “securities” category.

Advantages of CoreLedger’s NFA and TEOS

Versatility and Compliance

TEOS offers a versatile solution that combines documentation, personalized accounting, and governance. This enables the creation of Non-Fungible Tokens (NFTs) that digitize traditional processes without resulting in a securities classification.

Personalized Storage Certificates

NFAs can be used as personalized storage certificates that are not freely transacted between random parties. Transactions only occur between the issuer and a known, identified entity, or between the issuer and two identified entities. An example of this is purchasing gold and storing it in a vault or transferring registered shares.

Regulatory Alignment

TEOS ensures compliance with regulatory requirements by implementing a well-known and commonly used process using novel digital tools. This approach allows businesses to leverage blockchain technology without falling into the securities classification.

Conclusion

CoreLedger’s TEOS offers a powerful and compliant solution for blockchain businesses to navigate the complexities of tokenization and the regulatory requirements surrounding it. By facilitating the digitization of traditional processes through NFAs, TEOS enables business models to innovate while ensuring regulatory adherence. Embrace the future of blockchain with CoreLedger’s TEOS to build your business on a foundation of regulatory clarity and proactive decision-making.