Risk Disclosure
The risks that attach to tokenized real-world assets, stated before anybody is asked to consider one.
Before you rely on this
This document is a drafting framework prepared for a platform that is not yet trading. It has not been reviewed by qualified counsel in any jurisdiction, and it must be before it is relied upon by anybody.
This disclosure is general. It is not a substitute for the offering documents of any particular instrument, which will carry risks specific to that instrument and must be read in full.
1. You can lose everything you put in
Investments of this kind are capable of falling to zero. Past performance says nothing about future returns, and no return shown anywhere is promised or guaranteed by anybody.
2. You may not be able to sell
Tokenized real-world assets are usually illiquid. There may be no market, no buyer and no redemption right. A transfer may additionally be refused by the instrument’s own compliance rules even where a willing buyer exists.
Being able to see a holding on a screen is not the same as being able to sell it.
3. The token is not the asset
A token records an interest in a legal structure that in turn holds an asset. Your rights are whatever that structure gives you, and no more. If the structure fails, the token does not protect you.
Read what the structure actually entitles you to before assuming it entitles you to the asset itself.
4. Valuations are opinions
A valuation is one named party’s opinion on one date, arrived at by a stated method. It is not a price, not a guarantee, and not a figure anybody is obliged to transact at. Real-world assets are frequently valued infrequently, so a figure on screen may be considerably out of date.
5. Technology and custody risk
- A blockchain transaction cannot be reversed. An error may be permanent.
- Losing control of a wallet may mean losing the holding, irrecoverably.
- Smart contracts can contain defects, including in code that has been audited.
- A network may become congested, fork, or cease to be supported.
6. Regulatory and tax risk
The regulatory treatment of tokenized instruments is developing and differs by jurisdiction. Rules may change in a way that affects what you hold, what you may do with it, and how it is taxed. You are responsible for your own tax position and should take independent advice on it.
7. Issuer and counterparty risk
You depend on the issuer, and on the custodians, administrators and service providers around the structure. Any of them may fail. Material published about an instrument is the issuer’s, and the platform does not verify it.
Before this page is published
The highlighted terms above are facts about a specific legal entity that this draft does not know. Each must be supplied, and the whole document reviewed by qualified counsel, before anybody relies on it.
- REVIEW BY COUNSEL against the financial-promotion rules of every jurisdiction the platform is marketed in
- JURISDICTION-SPECIFIC WARNINGS where local rules prescribe particular wording