The Draft Law “On Tokenized Assets and Crypto-Assets”
What is it?The world and Ukraine are facing a global challenge of reshaping the future economy the key to which is related to the timely adjustments of the economy’s architecture to digital standards and the development of modern regulatory approaches. In particular, this directly relates to how and when the world and Ukraine will determine what virtual assets of the distributed ledger are, which have already become the norm for the global economy since in some countries they have received their legal assessment. Some virtual assets of the distributed ledger (mainly crypto-assets) have long been used for fast financial speculation, anonymous unsettled cross-border transfers, corrupt settlements, legalization (laundering) of proceeds of crime, etc.
What do we do?At the beginning of 2020, during the global COVID-19 pandemic, our Center initiated a process that was unique for Ukraine — the development of a new draft law. Almost 40 Ukrainian scientists, who were united by our Center into an interdisciplinary project team (lawyers, economists, public administration and information technology experts), became the developers. Another unique feature of our approach was its comprehensive coverage: regulation of all known types of virtual assets, and not just those that were popular among investors and the media (cryptocurrencies, NFTs, CBDCs, etc.). In a few months, our team managed to create a unique product that had no analogs in the world at that time, and a group of Ukrainian parliamentarians believed in it and officially submitted it as a legislative initiative (Draft Law No. 4328, https://itd.rada.gov.ua/billInfo/Bills/Card/4570).
Since we have direct access to the practice of virtual asset development and application and a deep understanding of the scope of real circulation of virtual assets, we proposed original terms and developed the entire extensive regulatory framework for the state and society.
Thus, we have proposed defining a tokenized asset as a type of virtual asset that exists exclusively in the digital data accounting system in the form of a record with an identifier of information derived from the original asset; and a crypto-asset as a type of virtual asset that exists exclusively in the digital data accounting system in the form of a record with an identifier of information that is not derived from the original asset.
Why is this important?Today, virtual assets of the distributed ledger and the distributed ledger technology itself have become the embodiment of a natural stage in the global evolution of social relations offering participants more trust and freedom of action. Their emergence is associated with significant hopes for the global positioning of states and their competitiveness for decades to come. There is no longer any doubt that these digital technologies have the potential to revolutionize many areas of social life. Products based on the distributed ledger technology including the most promising types of virtual assets of the distributed ledger, such as tokenized assets, can become a driving force for the modernization of not only the Ukrainian but the global economy as well.
What are the prospects?This draft law proposes regulation of all relations arising from the use of virtual assets, namely those that exist in the digital data accounting system based on the distributed ledger technology — tokenized assets and crypto-assets.
We focus on the comprehensive development of this area and the formation of international research schools at universities, as well as educating investors, parliamentarians and officials, so we are open to cooperation. Much of the knowledge gained will be applied in our project, the Academy of Platform-Based Economy.
Our vision of public regulation of the circulation of virtual assets using blockchain-based decentralized information platforms
