Legal Support for Asset Tokenization (RWA - Real World Assets)
The tokenization of Real World Assets (RWA) is one of the most promising directions in financial technology, involving the conversion of rights to physical assets (real estate, art, precious metals, commodities) into digital tokens on a blockchain. This process increases liquidity, simplifies fractional ownership, and accelerates transactions. However, the success of tokenization depends entirely on a solid legal "bridge" connecting the digital token to the real asset. In Georgia, where real estate and business registration processes are transparent, there is significant potential for tokenization, but strict adherence to civil and corporate law norms is essential to ensure the token holder has a genuine claim to the asset.
Asset tokenization services involve complex legal structuring to ensure the inseparable link between the token and the real asset:
- SPV (Special Purpose Vehicle) Creation: Establishing a special purpose entity that holds the physical asset, the shares or rights of which are then tokenized.
- Asset Due Diligence: Detailed study of the legal status of the real estate or other asset prior to tokenization.
- Custody Structure: Creating legal mechanisms for the safe custody of the asset to protect token holders from the asset being alienated without their permission.
- Reflecting Contracts in Smart Contracts: Overseeing the correct transformation of legal terms (dividends, voting rights) into technical code.
- Regulation of Fractional Ownership: Drafting rules for shared ownership and preparing Shareholders' Agreements.
- Synchronization with Registered Rights: Legal harmonization of Public Registry data with blockchain records.
Legal challenges are common in the tokenization process. For example, if real estate is tokenized, simply holding a token does not automatically make one the owner of the apartment in the Public Registry. An intermediate link is required (e.g., a holding company), where the token represents a share in the company or an obligation. If this structure is poorly constructed, the token holder is left "in the air" without any real rights. Enforcement is also an issue: if a token holder wants to sell the asset or encumber it, the legal mechanism must allow this in the real world without obstacles. Disputes often arise regarding asset valuation and management (e.g., who rents out the apartment, who guards the gold vault).
The legal basis for tokenization in Georgia relies on the Civil Code (property and obligations law), the Law on Public Registry, and the Law on Entrepreneurs. In the case of real estate, the primacy of Public Registry records is critical. If tokenization involves creating securities, the Law on Securities Market is involved. For RWA projects, considering the Tax Code is also important so that asset transfer and income distribution do not trigger unwanted tax burdens.
Cooperation with a lawyer begins with asset identification and selecting the tokenization model (direct ownership, fund share, debt instrument). Then, an SPV is created, and the asset is transferred to its balance sheet. Following this, an offering document and a Legal Opinion on the token's status are prepared. Lawyers also work with technology partners to ensure the reliability of "Oracles" (data sources) that connect real-world data (e.g., prices, weather, registration) to the blockchain.
Legal.ge offers access to innovative lawyers who understand both traditional asset management and Web3 technologies. Asset tokenization is the financial model of the future, but it requires precise legal architecture. Our platform specialists will help you create a transparent, secure, and compliant structure for integrating your assets into the digital economy. Find RWA tokenization experts on Legal.ge.
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