Yesterday the International Swaps and Derivatives Association (ISDA) published a guidance note exploring the legal enforceability of tokenized collateral. Part of the note focused on the nature of the collateral, while the balance considered the applicable jurisdiction and poses some high level legal questions.
In traditional finance, securities can often be classified into three groups. For bearer securities, the transfer of a piece of paper represents the transfer of ownership. Next, you have registered securities where the issuer or their agent keeps a record of ownership. Finally, you have dematerialized securities, where a central securities depository is responsible for updating the ownership records.
Likewise, tokenized collateral can take on a form similar to these three. ISDA refers to the collateral as having a Bearer, Registered or Claims structure.
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