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"Tokenized equity and tokenized stocks": new Consob Legal Research Paper (23 January 2023)

Legal Research Paper n. 25 entitledTokenized equity and tokenized stocks has been published. The paper was edited by Paolo Carrière (Bocconi University), Nicola de Luca (University of Campania Luigi Vanvitelli), Michele de Mari (University of Verona), Giorgio Gasparri (Consob), Tommaso Nicola Poli (Consob) and presented by Alberto Stagno d 'Alcontres (University of Palermo).

The work analyses the use of tokens and native tokens to represent shares.

After a brief illustration of the circulation of wealth by means of distributed ledger technology (DLT), the study examines the notion of crypto-assets and their taxonomy, as set out in the proposal for a Markets in Crypto-Assets Regulation (MiCA), highlighting the critical aspects of establishing a framework. Attention is also drawn to the likely repercussions of the approval of Regulation (EU) 2022/858 on a pilot scheme.

It goes on to examine crypto-assets from a corporate perspective by assessing the extent to which security tokens can be assimilated into traditional financial instruments, distinguishing between security tokens and utility tokens and between utility tokens and NFTs (non-fungible tokens).

Moving from a reconstruction of the methods of legitimisation and circulation of shareholdings provided for by the Civil Code, the text outlines the possibility of representing, de jure condito , shares, holdings or other corporate instruments in DLT and assesses whether this is compatible with the existing legal framework.

In conclusion, the paper makes some de iure condendo recommendations for the application of DLT technology in market infrastructures.