Digital Tokens: A Legal Perspective

IMF Working Papers, July 28, 2023

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Tokens are units digitally represented in a distributed ledger or blockchain.
The paper examines how tokens compare to traditional legal instruments in commercial law.
It assesses how tokens could offer superior solutions if proper legal foundations are established, including aspects of the law of securities and consumer protection law.

Tokens have the potential to transform a wide array of economic activities, from traditional commercial transactions to sophisticated financial undertakings.
The paper explores similarities and differences between tokens and traditional legal instruments in commercial law.
Emphasis on the need to align token functionality with existing legal categories (for example, securities law) and consumer protection frameworks to enable reliable operation and legal certainty.

Establish proper legal foundations for token operation covering:
- aspects of the law of securities
- consumer protection law
Legal and regulatory clarity is implied as a precondition for tokens to deliver superior commercial and financial solutions.

Author: José M. Garrido
Date: July 28, 2023
Series: Working Paper No. 2023/151
Issue: 151
Volume: 2023
Pages: 67
DOI: https://doi.org/10.5089/9798400250149.001
Stock No: WPIEA2023151
ISBN: 9798400250149
ISSN: 1018-5941
Subject: Blockchain and DLT, Financial institutions, Financial regulation and supervision, Securities, Securities regulation, Smart contracts, Technology, Virtual currencies
Keywords: aspects of the law of securities, Blockchain and DLT, Commercial Law, Consumer Protection, del Mercado de Valores, digital signature, Fintech, Global, non-fungible token, Securities, Securities Law, Securities regulation, Smart contracts, token offering, token taxonomy, Tokens, Virtual currencies

Source: IMF Working Paper "Digital Tokens: A Legal Perspective" by José M. Garrido, July 28, 2023.