10.2 Token Classification and Securities Law
A major compliance challenge for blockchain-based real estate platforms lies in the classification of tokens. Asset Avenue uses two main types of tokens:
AAV Token (Utility & Governance) This is the native platform token. It is used for governance voting, staking to access membership benefits, and incentivizing long-term community participation. AAV does not represent ownership in real estate or entitlement to profits. Legal counsel has reviewed its design to ensure that it functions as a utility token, not a security, under applicable regulatory standards (such as the Howey Test in the U.S. or the Swiss FINMA guidelines).
Property-Specific Tokens (Asset-Backed) These tokens represent fractional shares of ownership in a specific property via an SPV. Depending on jurisdiction and legal structuring, these may be classified as securities, membership units, or financial instruments. Asset Avenue takes a conservative approach and treats them as security-like instruments, triggering the appropriate regulatory compliance mechanisms.
To address these considerations, Asset Avenue complies with relevant securities laws in each jurisdiction where tokens are offered. These include:
Conducting jurisdictional analysis before launching projects in new countries.
Restricting sales to qualified investors or compliant public offerings, as per local laws.
Whitelisting investors via a verified KYC/AML process before allowing participation.
Restricting resale of property tokens to verified members, mitigating secondary market regulatory risks.
Where appropriate, exemptions such as Regulation D, Regulation S, or MiFID II thresholds are used to avoid registration requirements, supported by thorough legal documentation.
Last updated