Docker
Docker is our own designed legal framework for independent asset tokenization where the user stays in control, and is able to manage any legal right automated on-chain.
Introduction
This document presents the framework governing the tokenization of off chain assets. It establishes a structure for registering, managing and transferring asset backed tokens ensuring adherence to legal standards and providing clarity to all involved parties. Our objective is to create an efficient system that safeguards the interests of asset owners and token holders even in complex legal and operational scenarios.
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Overview
Content of Table
Asset Registration
A.1 Registration Process
A.2 Decentralized Registry Integration
A.3 Dual-Layer Recognition
Token Generation
B.1 Valuation and Token Division
B.2 Token Issuance Compliance
B.3 Token Holder Equity
Development of Smart Contracts
C.1 Contract Design and Coding
C.2 Transaction Management
Custody and Management of Physical Assets
D.1 Secure Storage Partnerships
D.2 Custodial Agreement Details
Digital Custody and Decentralized Management
E.1 Blockchain Ledger for Ownership Records
E.2 Decentralized Asset Management
Dealing with Legal and Operational Challenges
F.1 Bankruptcy Contingency Plan
F.2 Trustee Selection and Ranking System
F.3 Automated Management Transition
Compliance and Regulatory Adherence
G.1 Adherence to Securities Laws
G.2 GDPR and Property Law Compliance
G.3 Financial Reporting Standards
ESG Considerations and Ethical Standards
H.1 Development of ESG Policy
H.2 Sustainable Tokenization Initiatives
H.3 Community Engagement and Social Responsibility
Governance and Transparency
I.1 Transparent Governance Practices
I.2 Adherence to Governance Standards
Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance
J.1 Implementation of AML Protocols
J.2 KYC Procedures
Risk Management and Mitigation Strategies
K.1 Risk Assessment
K.2 Mitigation Plans
Dispute Resolution Mechanisms
L.1 Arbitration and Mediation
L.2 Smart Contract Arbitration Clauses
Technological Infrastructure and Security
M.1 Robust IT Infrastructure
M.2 Continuous Technology Monitoring
User Education and Support Services
N.1 Educational Resources
N.2 Support Services
Regulatory Reporting and Monitoring
O.1 Regular Reporting
O.2 Monitoring Changes in Regulations
Future-Proofing and Scalability
P.1 Scalability Considerations
P.2 Future-Proofing Strategies
Legal Structure for Asset Tokenization
A. Asset Registration
A.1 Registration Process: Each asset eligible for tokenization undergoes a rigorous registration process. This involves a detailed assessment to ensure the asset's suitability for tokenization, including legal due diligence, valuation, and compliance checks.
A.2 Decentralized Registry Integration: The asset is registered on a decentralized digital ledger, providing immutable records. This blockchain-based registry is not standalone; it is integrated with existing traditional registries, including land registries for real estate assets. This integration is performed in accordance with the German Grundbuchordnung (GBO), ensuring that the digital records reflect the legal status of the assets in the conventional property registry system.
A.3 Dual-Layer Recognition: This approach ensures that tokenized assets are recognized and upheld in both blockchain and conventional legal domains, facilitating legal clarity and trust among stakeholders.
B. Token Generation
B.1 Valuation and Token Division: Prior to token generation, each asset undergoes a comprehensive valuation process. This valuation determines how the asset can be divided into fractional ownerships, represented by tokens. The number of tokens issued for each asset varies, ranging from 100 to 10,000, based on the asset's value and the desired granularity of ownership stakes.
B.2 Token Issuance Compliance: The token generation adheres to BaFin regulations, ensuring that each token represents a justifiable and legally compliant stake in the asset. This process includes compliance with security laws and anti-money laundering (AML) regulations.
B.3 Token Holder Equity: The tokens are designed to provide clear value to their holders, representing equitable stakes in the assets and offering an accessible and flexible investment opportunity.
C. Development of Smart Contracts
C.1 Contract Design and Coding: Smart contracts are developed to regulate the interactions and transactions involving tokenized assets. These contracts are self-executing agreements, with all terms directly coded into the blockchain system. They are meticulously designed to be legally compliant with German laws.
C.2 Transaction Management: The smart contracts manage various aspects of the tokenized assets, including dividend distribution, ownership transfer, and voting rights. They facilitate automated, transparent, and efficient transaction handling.
D. Custody and Management of Physical Assets
D.1 Secure Storage Partnerships: For assets requiring secure storage, partnerships are established with banks and specialized storage companies. These partnerships are carefully selected based on their security systems, insurance coverage, and ability to provide safe custody of valuable assets.
D.2 Custodial Agreement Details: Legal contracts with these storage facilities specify their custodial responsibilities. These contracts define the role of the custodian, emphasizing their obligation to protect the assets without exerting control or claiming ownership rights. The agreements cover liability, inspection rights, asset movement, and transfer conditions.
E. Digital Custody and Decentralized Management
E.1 Blockchain Ledger for Ownership Records: The blockchain ledger is utilized to maintain a secure and transparent record of ownership and changes in token holdings. This digital registry is the authoritative source for all transactions involving tokenized assets.
E.2 Decentralized Asset Management: The framework implements decentralized management protocols that enable token holders to participate in decision-making processes. Major decisions about the assets, such as selling, leasing, or redevelopment, require the involvement of token holders through blockchain-implemented voting systems. This ensures governance, transparency, and prevents any form of tampering with the decision-making process.
F. Dealing with Legal and Operational Challenges
F.1 Bankruptcy Contingency Plan: In the event of company bankruptcy, a structured fallback mechanism activates. This consists of a network of pre-approved trustees, operating similarly to franchisees, who are prepared to assume asset management responsibilities. These entities are vetted for their financial stability, legal compliance, and operational expertise to ensure they can effectively manage the transition.
F.2 Trustee Selection and Ranking System: The trustees are ranked based on token holder trust votes. This democratic system allows token holders to influence the choice of trustee, ensuring that the most trusted entity takes precedence in case of insolvency. The voting system is transparent and periodically updated to reflect the current preferences of the token holders.
F.3 Automated Management Transition: Upon bankruptcy declaration, the smart contract system automatically initiates the transfer of asset management responsibilities to the highest-ranked trustee. This automated process is designed to minimize disruption and ensure continuous, seamless management of the tokenized assets.
G. Compliance and Regulatory Adherence
G.1 Adherence to Securities Laws: The framework is in full compliance with the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG) and Banking Act (Kreditwesengesetz, KWG). It addresses critical aspects of token categorization, issuance, trading, and management, ensuring that all operations are legally sound and adhere to financial regulations.
G.2 GDPR and Property Law Compliance: In accordance with the General Data Protection Regulation (GDPR), the framework prioritizes the protection of personal data. It also aligns with property laws, particularly in aspects related to title and ownership transfer, ensuring all tokenization activities are legally compliant with German real estate and property regulations.
G.3 Financial Reporting Standards: Financial activities and reporting are conducted in accordance with International Financial Reporting Standards (IFRS) and the German Commercial Code (Handelsgesetzbuch, HGB). This guarantees a transparent, globally recognized approach to financial disclosures and accounting practices.
H. ESG Considerations and Ethical Standards
H.1 Development of ESG Policy: The framework includes a robust Environmental, Social, and Governance (ESG) policy, which is in line with German standards. This policy details the commitment to sustainable practices, social responsibility, and ethical governance in managing tokenized assets.
H.2 Sustainable Tokenization Initiatives: Emphasis is placed on green tokenization efforts, including projects that contribute positively to environmental sustainability, such as eco-friendly buildings or renewable energy. The aim is to minimize the carbon footprint associated with asset management and promote investments with a positive environmental impact.
H.3 Community Engagement and Social Responsibility: The ESG policy underscores the importance of positively impacting local communities associated with the tokenized assets. This involves engaging with local stakeholders, understanding their needs, and ensuring that asset management practices benefit rather than harm these communities.
I. Governance and Transparency
I.1 Transparent Governance Practices: The framework is built on a foundation of strong governance. All decisions, particularly those affecting tokenized assets, are made through transparent processes. This includes clear communication channels with stakeholders, including token holders, communities, and regulatory bodies.
I.2 Adherence to Governance Standards: Decision-making processes within the tokenization ecosystem adhere to strict governance standards. This includes the establishment of checks and balances to prevent conflicts of interest, ensuring that all operations are conducted ethically and transparently.
J. Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance
J.1 Implementation of AML Protocols: The framework incorporates stringent Anti-Money Laundering procedures in line with German regulations and international standards. This includes monitoring and reporting suspicious financial activities, conducting due diligence, and maintaining records.
J.2 KYC Procedures: Know Your Customer processes are integrated into the token registration and transaction phases. This ensures identity verification of all participants, thereby preventing fraudulent activities and enhancing the security of the tokenization platform.
K. Risk Management and Mitigation Strategies
K.1 Risk Assessment: Continuous risk assessment is conducted to identify potential legal, financial, and operational risks associated with tokenized assets. This includes market volatility, legal changes, and technological risks.
K.2 Mitigation Plans: The framework includes detailed risk mitigation strategies, such as diversification of assets, regular legal reviews, and technology upgrades to address identified risks and minimize their impact.
L. Dispute Resolution Mechanisms
L.1 Arbitration and Mediation: The framework establishes clear dispute resolution processes, including arbitration and mediation, to handle conflicts between stakeholders. These processes are designed to be fair, efficient, and less costly than traditional legal proceedings.
L.2 Smart Contract Arbitration Clauses: Dispute resolution clauses are integrated into smart contracts to facilitate timely and effective resolution of conflicts arising from tokenized asset transactions.
M. Technological Infrastructure and Security
M.1 Robust IT Infrastructure: A secure and scalable IT infrastructure underpins the tokenization platform. This includes robust data encryption, regular security audits, and compliance with cybersecurity standards.
M.2 Continuous Technology Monitoring: The framework ensures continuous monitoring and updating of the technological infrastructure to guard against emerging threats and to incorporate advancements in blockchain technology.
N. User Education and Support Services
N.1 Educational Resources: To enhance user understanding and trust, the framework provides comprehensive educational resources about tokenization, including guides, FAQs, and webinars.
N.2 Support Services: Dedicated support services, including customer service hotlines and online help desks, are available to assist users with inquiries and issues related to tokenized assets.
O. Regulatory Reporting and Monitoring
O.1 Regular Reporting: The framework mandates regular reporting to regulatory authorities, ensuring compliance with ongoing regulatory requirements and transparency in operations.
O.2 Monitoring Changes in Regulations: A dedicated team monitors changes in relevant regulations, ensuring that the tokenization platform remains compliant with current laws and adapts to new regulatory environments.
P. Future-Proofing and Scalability
P.1 Scalability Considerations: The framework is designed with scalability in mind, allowing for expansion in terms of asset types, user base, and geographical reach without compromising efficiency or compliance.
P.2 Future-Proofing Strategies: Strategies are in place to adapt to future technological, legal, and market changes, ensuring the long-term viability of the tokenization platform.
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