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A Primer: Understanding Tokenized Real-World Assets by: Lilya Tessler (Partner), Andrew Sioson (Partner), and Erika Cabo (Senior Managing Associate) at Sidley Austin, LLP Tokenization of real-world assets (RWAs) is revolutionizing the way we perceive and manage assets. This article aims to provide an overview of RWAs, debunk common myths, and outline the legal considerations and risks associated with tokenized RWAs. What Are Tokenized RWAs? The term “tokenized RWAs” refers to the digital representation of physical or intangible assets utilizing a token recorded on a blockchain. This innovative approach allows for the efficient recording, trading, transferring, and management of tangible assets in a digital format.  A wide range of RWAs can be tokenized, including real estate, commodities, art, and intellectual property. By recording ownership of these assets using digital tokens, they can be more easily tracked and traded on blockchain platforms. This is similar to the e-commerce trend in the 1990s, when online shopping sites were developed to allow consumers to buy physical goods by seeing digital images on the internet, instead of physically going to a brick-and-mortar store in a shopping mall to see, feel, and buy the items.  The primary benefits of tokenizing real-world assets include increased liquidity, fractional ownership, and enhanced transparency. Tokenization allows for the division of assets into smaller, more affordable units, making it easier for a broader range of purchasers to participate. Additionally, the use of blockchain technology ensures a transparent and immutable record of ownership and transactions.  Debunking Myths: Tokenized Assets vs. TGEs and STOs Tokenization is not a new concept. Digital records have existed for years from digital shopping sites, digital concert tickets, and digital securities. Tokenization of RWAs is simply recording these digital records on a blockchain as opposed to other centralized databases. Tokenizing an asset does not change the nature of the asset and it is not to be confused with token generation events (TGEs) or security token offerings (STOs). Below are some of the common myths regarding asset tokenization that need to be clarified. Myth 1: Tokenizing an Asset Changes the Nature of the Asset Tokenizing an asset does not change the nature of the asset itself. Tokenization is the process of creating a digital representation of a physical or intangible asset using a token recorded on a blockchain. This digital token serves as a record of ownership and can be traded or transferred on blockchain networks. However, the underlying asset remains the same, whether it is real estate, art, commodities, or intellectual property. The token merely provides a more efficient and transparent way to manage and transfer ownership of the asset, without altering its fundamental characteristics or value.  Myth 2: Tokenized Assets Are TGEs TGEs are a mechanism used by new blockchain protocols to distribute tokens to potential users of the network. These tokens, such as ETH (Ethereum) and AVAX (Avalanche), are designed to provide functionality within the blockchain ecosystem, enabling users to interact with the network, pay for services, or validate transactions, among other uses. TGEs are not a form of fundraising, but they are also not tokenized RWAs, because the token associated with the TGE represents utility on the network and not a digital representation of an actual asset. In contrast, tokenized RWAs are digital representations of actual, tangible, or intangible assets. The value of these tokenized RWAs is directly linked to ownership of the underlying assets, which can be verified and audited. Myth 3: Tokenized Assets Are Just Another Form of STOs STOs involve the issuance of tokens that are classified as securities and are subject to regulatory oversight. These tokens are backed by assets that generate income or have equity-like features, such as dividends, voting rights, or profit sharing. Although tokenized RWAs can be tokenized equity or fund interest, they are not limited to securities and have many more benefits when representing a wide range of other physical or intangible assets. The primary focus of tokenized RWAs is on the digital representation and fractional ownership of these assets, rather than raising capital through the issuance of securities. Legal Considerations Regulatory Compliance: Navigating the regulatory landscape is crucial for tokenized RWAs. Compliance with U.S. securities and commodities laws, anti-money laundering regulations, commercial laws, and know-your-customer requirements is essential to ensure the legality and legitimacy of tokenized assets.  Ownership and Transfer of Title: The digital representation of an asset must accurately reflect the legal ownership of the holder and their enforceable right to the underlying asset. Ensuring clear and enforceable ownership rights is critical to the success of tokenized RWAs. Smart Contracts: Smart contracts are self-executing agreements encoded on the blockchain and triggered by predefined conditions. While they play a vital role in automating and streamlining the tokenization process, one must consider whether smart contracts are enforceable, comply with existing contract laws and regulations, and adequately address potential disputes and contingencies.  Jurisdictional Issues: Tokenized assets can be created and traded globally, raising questions about cross-border jurisdiction and applicable laws. Being aware of the roles of regulatory bodies such as the U.S. Securities and Exchange Commission, U.S. Commodity Futures Trading Commission, European Securities and Markets Authority, Monetary Authority of Singapore, Hong Kong Monetary Authority, and others globally is of paramount importance in navigating different legal frameworks and standards for tokenization.  Risk Considerations and Management Security Risks: Blockchain technology is not immune to cybersecurity risks, such as hacking, phishing, or malware attacks. Tokenized assets may be vulnerable to theft, loss, or manipulation if the private keys, wallets, or platforms that store and access them are compromised. Ensuring the security and integrity of the blockchain and the tokenized assets is paramount to protecting investors and maintaining trust in the system. Market Risks: Tokenized assets are subject to market volatility and liquidity risks, depending on the supply and demand of the tokens and the assets, as well as the performance and stability of the blockchain platforms. Considering risk mitigation strategies is essential in order to protect investments and navigate the complexities of the tokenized asset market. Conclusion Tokenized RWAs represent a significant advancement in the management and trading of physical and intangible assets. They can unlock new value, efficiency, and innovation for both asset owners and investors. However, they also pose significant legal challenges and risks that need to be addressed and managed. Seeking guidance from law firms on regulatory compliance, ownership issues, and risk management, while engaging with experienced vendors and blockchain platforms, can provide the necessary technical knowledge and support to ensure the smooth operation of tokenized RWAs. As the landscape continues to evolve, staying informed and proactive will be key to leveraging the full potential of tokenized RWAs.

Audio show ushers in a new and necessary storytelling format for navigating the world of Web3, exploring themes of privacy, regulatory compliance, niche markets makers, and decentralized exchange ecosystems in blockchain. Web3 policy-focused podcast, Owl Explains, returns for a second season of ‘Crafting The Crypto Economy’ with leading academics to tackle timely regulatory challenges and the practical blockchain applications reshaping Web3. Focusing on critical topics from Decentralized Exchanges (DEXes) regulation, blockchain privacy, and MEV mitigation, ‘Crafting The Crypto Economy’ introduces academic thoughtleaders and papers from around the world with the latest research on blockchain technology and the crypto economy. With five substantive episodes, Season 2 drops in with well-timed topics to equip policymakers and stakeholders with valuable insights on Web3 regulation and emerging challenges. The hosts of this series, Professors Andreas Park (University of Toronto) and Fahad Saleh (University of Florida) are leading authors in Blockchain Economics and Finance and are part of the Crypto and Blockchain Economics Research (CBER) Forum. The group producing the podcast, Owl Explains, is a trusted blockchain policy resource driven by the expertise of Ava Labs’ Legal team. This partnership between Owl Explains and the CBER Forum seeks to bridge the gap between academic rigor and actionable insights for policymakers. As the SEC increasingly scrutinizes decentralized finance (DeFi) platforms, Episode 1, ‘Regulation of Decentralized Exchanges,’ with Professors Campbell Harvey of Duke University and Joel Hasbrouck of NYU Stern, dives into the novel risks for traders who trade at DEXes and why standard regulatory approaches are not well-suited for addressing those risks. In Episode 2, ‘Blockchain Privacy and Regulatory Compliance,’ Professor Fabian Schär from the University of Basel discusses how blockchain users may attain privacy in their transactions while also remaining compliant. Despite the perception of anonymity, most blockchain transactions are traceable, leading to a rising demand for privacy solutions. The episode explains how blockchain identities are not anonymous and what methods may be implemented to achieve both privacy and regulatory compliance. Detailing the economic values presented in the concepts of Maximal Extractable Value (MEV) and Loss-Versus-Rebalancing (LVR), Columbia University’s Professor Ciamac Moallemi discusses associated mitigation methods such as expedited block times and auction mechanisms for extraction in ‘Mitigation Methods for MEV and LVR.’ Moving into intent-based markets (i.e., Uniswap X, CoW Swap) as a hot topic, ‘Decentralized Exchange (DEX) Aggregators and Solvers,’ with Professor Mallesh Pai of Rice University, explores the economic implications of these niche markets, potential outcomes for traders, and the impact of their underlying economic structures. The World Economic Forum predicts that 10% of global GDP will be tokenized on the blockchain by 2027. Wrapping up the Season 2, ‘Deep-dive on the Avalanche Blockchain’ features Ava Labs’ Chief Protocol Architect Stephen Buttolph to discuss how Avalanche’s blockchain can be used for the tokenization of real-world assets, specifically through the lens of Avalanche’s consensus protocol. Owl Explains and the CBER Forum are committed to helping regulators navigate the world of Web3 and break through the hype. In an always-on blockchain landscape, ‘Crafting The Crypto Economy’ breaks through the noise, leveraging curated perspectives and mental models from top minds in the space.

At Owl Explains, we believe the future of blockchain and crypto lies in the conversations happening today between industry leaders and policymakers. That’s why our Congress Series is dedicated to bringing you the sharpest voices in US policy, offering insights on the regulatory and legislative shifts shaping the blockchain landscape. From bipartisan collaboration to bold individual initiatives, our guests tackle the tough questions about self-custody, tokenization, and market structure clarity. These are the policymakers from both at the heart of the debate—ready to share their vision for the role of blockchain in America’s economic future. Meet the Voices of Change: Ep. 17: Congressman Mike Flood Kicking off with Rep. Mike Flood, this episode takes a close look at the difference in perspectives on crypto policy between the House and the Senate and how Congress can build momentum for lasting change. Ep. 32: Congressman French Hill Rep. French Hill shares his take on bipartisan efforts to move blockchain forward, touching on key themes like self-custody and market clarity. Ep. 30: Congressman Wiley Nickel As the political landscape evolves, Rep. Wiley Nickel brings fresh perspective to the table, discussing tokenized markets and their potential to boost US innovation. Ep. 35: Congressman Shri Thanedar (D-MI-13) Rep. Shri Thanedar explores blockchain’s potential to create equity and opportunity, focusing on how technology can drive meaningful policy change. Ep. 36: Congresswoman Yadira Caraveo (D-CO-08) Colorado’s Congresswoman Yadira Caraveo examines the intersection of policy and technology in her state, emphasizing the potential for decentralized systems to support local economies. Ep. 40: Congressman Dusty Johnson (R-SD) Rep. Dusty Johnson offers a refreshing take on blockchain’s role in rural America, highlighting how innovation isn’t just for Silicon Valley. Ep. 42: Congressman Warren Davidson (R-OH-08) Rep. Warren Davidson doesn’t shy away from the big issues—self-custody, tokenization, and why market structure clarity is critical for the U.S. to reclaim its crypto leadership. A Growing Series, A Growing Dialogue As the Congress Series grows, so does the urgency of the topics at hand. Whether it's legislation like the FIT21 Act, the fight to protect self-custody, or debates on token taxonomy, these episodes are more than conversations—they’re a front-row seat to the policies that will define blockchain’s future in America. Cryptocurrency and blockchain technology are rapidly transforming the global economy. As these technologies become more widely adopted, governments are increasingly grappling with how to regulate them. Crypto policy is important because it will shape the future of the crypto industry and its impact on society. The United States is at the forefront of the global crypto policy debate. At Owl Explains, we’re proud to bring together voices from both sides of the aisle to discuss solutions, challenges, and the road ahead. The series is just getting started, and there’s so much more to come. Catch up on the Congress Series today and hear directly from the policymakers shaping the future of crypto, on Spotify, Apple Podcasts, or right here in our owl website.

As we gear up for the Avalanche Summit LATAM 2024, we want to take a moment to express our deepest gratitude to the sponsors who have made this event possible. Their support empowers us to bring together the brightest minds in the blockchain, crypto, and Web3 space for meaningful discussions, collaborations, and innovation. We are thrilled to partner with these visionary companies and organizations, each playing a vital role in pushing the boundaries of what's possible in the Web3 world. Without further ado, we’d like to introduce our valued sponsors: Platinum Owl Sidley Austin LLP Golden Owls Cleary Gottlieb Steen & Hamilton Davis Polk & Wardwell Sher Tremonte Boreal Owls Fenwick Latham & Watkins Willkie Farr & Gallagher LLP Snowy Owl HJF Law Community Partner Global Blockchain Business Council Our sponsors are more than just logos on our website—they are leading law firms, trade associations, and innovators who share our passion for decentralization, transparency, and the transformative power of blockchain technology. What's on the Agenda? The Best of Buenos Aires! Imagine this: a summit filled with cutting-edge discussions, hands-on workshops, and networking opportunities with some of the brightest minds in blockchain, all set in the dynamic, bustling city of Buenos Aires. From exploring the iconic streets of San Telmo to the modern vibe of Puerto Madero, the Avalanche Summit is going to be an event that brings together innovation and the unique spirit of Argentina, Latin America, and beyond! 🇦🇷✨ And let’s not forget the local flair! From delicious Argentine cuisine (empanadas, anyone? 🥟) to the vibrant street art that colors the city, we’re blending tech with culture in a way only Buenos Aires can. To our sponsors—thank you for believing in this vision and helping us make it happen. Your support is turning this event into a groundbreaking moment for the Web3 community in LATAM. We can’t wait to see what we’ll achieve together! So, let’s give a big round of applause to these amazing partners and look forward to meeting up in Buenos Aires, where the future of blockchain is being written, one tango step at a time! 🎵 Get your tickets for 50% off using our code OWL50.

The inception of blockchain technology, heralded by Satoshi Nakamoto's whitepaper on Bitcoin, ignited a revolution whose full magnitude is only now coming to light. Yet, the true marvel doesn't lie solely in the foundational concept outlined in 2008; it resides in the ongoing evolution, fueled by brilliant minds since. Today, we stand on a new frontier: customization. Picture a world where launching a tailored blockchain, precisely attuned to your requirements, is not just a possibility but a reality. Custom blockchains represent an evolution from the original Satoshi blueprint; they embody vibrant ecosystems full of innovation. This newfound flexibility empowers users to design blockchains endowed with specific features and functionalities. The result? New applications and diverse use cases.  Consider the foray of Sports Illustrated into blockchain technology, where sports fans securely purchase and trade verified tickets to their favorite events, all facilitated by a custom blockchain engineered for authenticity and transparency. This reality, where tickets unlock immersive experiences and collectibles, is not a distant dream but a tangible outcome crafted by forward-thinking enterprises. Similarly, Lemonade's* disruption in the insurance industry depicts the transformative potential of custom blockchains. Through their tailored solution, they've revolutionized weather insurance for small farmers, providing a seamless and transparent shield against unpredictable climate events. This paradigm shift underscores blockchain's role as a tangible force for positive change, far beyond mere rhetoric. The collaboration between Deloitte and FEMA** on disaster recovery reimbursement offers yet another glimpse into the power of custom blockchains. By leveraging blockchain technology, they've streamlined the reimbursement process, ensuring timely and transparent aid to those affected by disasters while simplifying audits. It's a compelling illustration of blockchain's capacity to enhance efficiency and accountability in critical domains. When it comes to loyalty programs and gaming, SK Global’s custom blockchain platform is at the vanguard of innovation. Their solution enables millions of South Korean telecom customers to use loyalty points across thousands of merchants, from real-world items to digital goods, with confidence in the authenticity and scarcity of their digital assets. This convergence of ecosystems and commerce, powered by blockchain technology, illuminates a path towards a more secure and transparent future for consumers and merchants alike. Even traditional financial institutions are embarking on the era of custom blockchains, with giants like Citi and JPM exploring the potential to trade traditional financial assets on custom platforms. This transition promises enhanced efficiency, transparency, and security in the financial landscape, marking a significant stride towards mainstream blockchain adoption. Whether revolutionizing real estate transactions, enhancing supply chain visibility, or reimagining loyalty programs, the space for innovation is extensive. What if we could tailor our digital ecosystems to align with our needs and aspirations? While some headlines may dwell on the volatility of cryptocurrencies, the true narrative lies in the transformative power of blockchain technology. We’re all about more hoot and less hype and recognize the capabilities of custom blockchains as canvases where creativity flourishes and ideas find their specific homes. It's time for Washington, and the world at large, to recognize custom blockchains as catalysts for innovation, efficiency, and inclusion across industries.  *Lemonade's use case: *Lemonade's use case: **Deloitte and FEMA: **Deloitte and FEMA:

In the realm of blockchain, transparency is key, which is why The Proposed U.S. Disclosure Guidelines for a Particular Category of Tokens—revealed at the Sidley-Rutgers Fintech and Blockchain Symposium—signify a crucial step towards standardization in the blockchain industry. All feedback is welcome! Many trade associations are collaborating so you can provide feedback through them. Check out the full guidelines here.

As seen in The International Journal of Blockchain Law (2024) by the GBBC.

The U.S. Internal Revenue Service (IRS) announced this week that it is seeking feedback regarding the tax treatment of NFTs as collectibles under tax law that will inform upcoming guidance. Specifically, it is soliciting comments on: The treatment of NFTs as collectibles and other questions such as whether the IRS has accurately defined NFTs; Its use of a look-through analysis to determine whether a digital asset may be taxed as a collectible, as opposed to a capital asset, which is currently the treatment used for sales or exchanges of digital assets; The factors it should use to consider whether an NFT is a collectible for tax purposes; Whether there are any issues with applying the tax treatment for collectibles to individually directed accounts under a qualified plan; and What other guidance related to NFTs would be helpful. Comments are due on June 19, 2023. Importantly, the IRS defines an NFT as "a unique digital identifier that is recorded using distributed ledger technology and may be used to certify authenticity and ownership of an associated right or asset." And it acknowledges that "[o]wnership of an NFT may provide the holder a right with respect to a digital file (such as a digital image, digital music, a digital trading card, or a digital sports moment) that typically is separate from the NFT." (footnote omitted). It also acknowledges that NFTs may provide certain rights, such as attending an event, or proving ownership of a physical item. This helps distinguish NFTs, which are not intended to be financial in nature, from other types of digital assets. In other words, the IRS is taking a step towards a sensible token classification system by expanding on its guidance for digital assets. The notice provides that the proposed treatment of NFTs as collectibles would fall under a provision of the tax code that applies to collectibles held within individual retirement accounts, and the sale or exchange of a collectible held for over one year would be subject to a maximum 28%perc capital gains tax (as opposed to a lower tax rate for capital assets). Per the IRS’ look-through analysis, an NFT would be treated as a collectible for tax purposes if the asset or associated right tied to the NFT also meets the definition of a collectible. The tax laws state that works of art, rugs or antiques, metals or gems, stamps or coins, alcoholic beverages, or certain tangible personal property are considered collectibles. For example, an NFT representing ownership of a stamp would be treated as a collectible. On the other hand, NFTs representing objects outside of this category would not be classified as collectibles. Where further analysis is required is whether a collectible constitutes a “work of art,” an area where the IRS is requesting feedback.

What is it really? It's the process of inspecting, identifying, clustering, modeling and visually representing data on a blockchain. Blockchain analytics can involve the use of software tools and open source information (OSINT) to analyze data on blockchain networks. These tools scrutinize transaction patterns, wallet addresses, and other data points on a blockchain to provide insights into the activities occurring on the network. Blockchain analysis is done for a variety of reasons from market analysis to investigating illicit activity. Blockchain investigations are commonly conducted to uncover illicit activities such as money laundering, fraud, and the use of cryptocurrency in criminal enterprises. Investigations leverage analytics tools to track and identify this activity on-chain. The transparent nature of the blockchain allows for investigators to follow the flow of funds on the public ledger. How it Works: Data Aggregation: collecting, compiling and summarizing information from various sources across blockchain networks Pattern Recognition: identifying and interpreting behaviors and trends within the aggregated data Forensic Analysis: systematically interpreting the aggregated data and recognized patterns to come to investigative conclusions Purposes (not an exhaustive list): AML compliance and regulatory reporting Fraud detection Security analysis Market analysis Enhance security and trust in blockchain networks Aiding law enforcement to catch 'bad actors'

Cybersecurity is all about the financial incentives. Getting cybersecurity regulation right means using the threat of regulatory fines to align financial incentives so that companies do the right thing. Compared to most existing cybersecurity regulations, however, the financial incentives in cryptocurrency/Web3 are very different.  Most existing cybersecurity regulations aim to improve the security of consumer PII and personal information that companies hold. Because the theft (more accurately: copying) of consumer PII by hackers during a data breach does not result in an immediate financial impact to a company's bottom line, companies have historically paid less attention to cybersecurity than they should. Since the free market financial incentives for companies to secure consumer data are poor, regulators have naturally stepped in with a regulatory stick (where the free market carrot has failed). The financial incentives in crypto, however, are very different. With crypto, if you are hacked and your crypto is stolen, you've lost your own assets. That's a huge incentive to do cybersecurity properly. Here are five major takeaways that regulators should consider: For companies self-custodying their own crypto, financial incentives are already 100% aligned. If Company X holds $1 million in cryptocurrency, and a hacker steals it, the company just suffers an immediate financial loss of $1 million. Regulatory fines would not offer any greater financial incentives for Company X to do the right thing. For companies that hold someone else's crypto assets, the financial incentives are not quite so aligned. If a company custodies $100 million, only $1 million of which is their own, and a hacker steals all $100 million, then the company will simply declare bankruptcy and leave their debtors with nothing. An example might be a centralized crypto exchange, or a DeFi service built on top of a smart contract. In these kinds of situations it might be appropriate for regulators to require minimum security controls to protect users. Getting cybersecurity regulations right is hard. The result of cybersecurity regulations in other areas (such as consumer PII or PHI) has been that companies will do the bare minimum to satisfy cybersecurity regulations, and no more. Finding the right balance between creating regulatory financial incentives without unduly stifling innovation becomes a difficult balancing act. Hackers don't care about regulatory compliance. Cyber defenders have to be right every single time, and attackers only have to be right once. Unlike environmental protection regulation, where accidental oil spills or illegal toxic waste dumping is the primary concern, in cybersecurity we are worried about malicious third parties acting outside the reach of the law in countries like North Korea or Russia. There is frequently no legal recourse in the event of a crypto hack. Crypto startups need to front-load security spending. In most startups, the biggest risk is going out of business, not cybersecurity risk. As a result, startups tend to run very insecure for a couple of years until they are financially successful enough to go back and fix things (so-called "tech debt"). However, this approach does not work in the crypto space, where hackers frequently prey on lean, insecure startups that enjoy overnight financial success. Forcing crypto startups to frontload security expenditure from the beginning could be a key lever of effective regulation. Cybersecurity risk in the crypto/Web3 space is high... ... higher than in most other verticals, because we're not talking about the security of information, but about real, fungible, and non-reversible financial assets. The stakes are high and companies in the crypto space take security seriously. Financial incentives to do security properly align much more closely in the crypto space than in almost any other vertical. The alignment is not 100% perfect, but it is close enough that regulators should take a "light touch" approach to crypto cybersecurity regulation.

Branch 5 of the Tree of Web3 Wisdom suggests that regulators from different jurisdictions embrace certain first principles when thinking about blockchain, tokenization, and cryptoassets. Market integrity is one such core area for regulation. The topic seems especially ripe in light of the many events in the last ten months that led to disarray in both traditional and cryptoasset markets. Gibraltar prophetically implemented its market integrity principle last spring. Perhaps more people should have paid attention. In April 2022, the Gibraltar Financial Services Commission (GFSC) issued the tenth of its regulatory principles for DLT Providers, laying out market integrity requirements. Principle no. 10 obliges a DLT Provider to conduct itself in a manner that "maintains or enhances the integrity of any markets in which it participates."  The concept of market integrity is not always easy to pin down so the related GFSC guidance note sets forth the operational, technical, and organizational standards that DLT Providers are expected to meet and provides examples of good practices for implementing and complying with the market integrity regulatory principle. The Guidance Note states: "Market integrity is essential to the fair, orderly and efficient functioning of a given market as well as of the overall marketplace more generally. It encompasses a number of key responsibilities, such as monitoring for manipulative trading and other forms of market abuse, and fostering non-discriminatory market access, transparency in price formation, fair trading practices, high disclosure standards and robust consumer protection." The GFSC guidance highlights four categories of issues as important to market integrity: market manipulation, insider trading, disclosures, and trading standards. In each case, the Guidance Note gives examples and recommendations for best practices associated with them. For example, DLT providers should make disclosures regarding the markets in which they operate, the assets they trade, and other activities they conduct in those markets, to create and maintain an appropriate level of transparency. For trading standards, they should provide accurate and prompt market data to all stakeholders, such as information about bids, offers and last prices, and any other data relevant to achieving fairness and transparency; put measures in place to prevent preferential treatment for any subset of participants when placing or executing orders; and evaluate the execution quality of trades that take place within the markets that it operates and comparing it to industry best practice. For market manipulation and insider trading, DLT Providers should implement policies and procedures to root out and prevent such activities. At the same time, the GFSC acknowledges the need for some flexibility, stating that each DLT Provider’s responsibilities will depend on the nature of its business and its role and participation in a given market and in the virtual asset marketplace overall. It also acknowledges that flexibility is needed to address the different features and functions of virtual assets and the manner in which they trade. This Owl applauds the GFSC’s approach: to create a clear principle with clear guidance on how to implement it without being too prescriptive. This flexibility works because it can accommodate the variety of roles and operational features of market participants relevant to a DLT Provider’s business.  This is music to this Owl’s ears and chimes perfectly with our Tree of Wisdom – specifically branch 3 (classify tokens sensibly) and branch 4 (enact context appropriate regulation).  The 5th branch of our Tree of Wisdom is "think global." Our hope is that Gibraltar’s approach can serve as a template for authorities in other jurisdictions. Global market integrity must be a first principle for long term growth and maturation of the cryptoassets ecosystem, as well as in more traditional markets. We encourage a constructive interchange between industry and regulators to inform the development and implementation of market integrity rules. Just like Gibraltar did.