The Hague Conference on Private International Law (HCCH) has launched a project focused on the legal implications of digital asset tokenization. This project seeks to provide clarity on the legal framework for cross-border businesses involved in digital assets. The initiative will cover various types of digital tokens, including digital securities and blockchain-based asset management. The HCCH aims to determine which laws apply to international businesses dealing with digital assets and how legal decisions are enforced across borders.
A proposal has been put forward to the Council on General Affairs and Policy (CGAP) suggesting the commissioning of a study on the private international law challenges related to digital tokens. The study would encompass various types of digital tokens such as real estate tokens, utility tokens, payment tokens, NFTs, and stablecoins, excluding securities, central bank digital currencies, and carbon credits which are being addressed in a separate project. The aim is to present a report with recommendations to the CGAP by 2025.
The HCCH project on digital asset tokenization will involve collaboration with experts and external observers. Member countries will be invited to nominate specialists in digital tokens, including legal and technical experts and individuals with experience in national digital initiatives. The project follows the adoption of digital asset principles in 2023 and the collaboration between UNIDROIT and HCCH on potential areas for future work. These areas include applying existing custody rules beyond traditional custody and exploring the legal implications of tokenized assets.
The joint project conducted by UNIDROIT and HCCH has identified tokenization as a key focus area, with a particular interest in the impact on established financial institutions. Financial institutions have shown increasing interest in the potential of tokenization, with Moody’s noting a significant increase in the value of tokenized funds, driven by US treasury tokenization. Bank of America predicts that tokenization will bring about significant transformations in financial and non-financial markets in the near future. The project aims to address the legal implications of tokenization and ensure a clear legal framework for businesses operating in this space.
The HCCH project on digital asset tokenization aims to address the legal challenges faced by businesses operating across borders with digital assets. By clarifying the legal framework for digital tokens, the HCCH seeks to establish guidelines for how laws apply to cross-border transactions involving digital assets and how legal rulings are enforced internationally. With the support of experts and external observers, the HCCH project will explore various types of digital tokens and their implications on the existing legal framework.
In summary, the HCCH has initiated a project focused on digital asset tokenization to provide legal clarity for cross-border businesses. The project aims to clarify the legal implications of various digital tokens, excluding certain types already under consideration in separate projects. Through collaboration with experts and external observers, the HCCH seeks to address the challenges faced by businesses operating in the digital asset space. The joint project with UNIDROIT has identified tokenization as a key focus area, particularly in relation to established financial institutions. Tokenization is seen as a transformative force in financial and non-financial markets, with potential legal implications that need to be addressed.
