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Uh good afternoon everyone and thank you for joining to uh our third annual international scientific practical conference social justice and digital economy.
International conference on tokenization's impact on social justice and digital economy, focusing on legal, economic, and technological challenges.
Key Takeaways
- Tokenization bridges real and digital economies, transforming asset ownership and investment.
- Effective legal and regulatory frameworks are essential to harness tokenization's benefits and mitigate risks.
- International collaboration is critical to address the global nature of digital asset regulation and market integration.
- Tokenization can enhance social justice by increasing financial inclusion and transparency.
- Ukraine's experience underscores the role of digital innovation in economic recovery and modernization.
Summary
- The third annual international scientific practical conference focuses on social justice and the digital economy in 2026, emphasizing tokenization.
- Tokenization is described as converting real-world assets into digital assets, enhancing market accessibility, transparency, and investment opportunities.
- Ukraine's postwar recovery and modernization highlight the importance of tokenization for economic transformation and European integration.
- Speakers from Ukraine, Canada, Switzerland, UK, Estonia, and the EU discuss global challenges and opportunities in tokenization.
- The conference stresses the need for interdisciplinary cooperation among lawyers, economists, technologists, and regulators.
- Legal frameworks must evolve to address digital ownership, investor protection, fraud prevention, and alignment with international standards.
- Tokenization can democratize finance, support startups and small businesses, and promote fair economic growth if implemented with clear rules.
- The event fosters international dialogue to share knowledge and develop practical recommendations for policymakers and the professional community.
- Experts highlight tokenization as a key tool for transparent, sustainable, and competitive economic development.
- The conference aims to inspire new partnerships, ideas, and solutions for the future of digital assets and the digital economy.
Full Transcript — Download SRT & Markdown
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uh topic today is tokenization and its impact for real economy and our first speaker with welcome speech will be uh Vimemerus Steven uh he's director of of institute of economical legal research national academy of science named by Valentin Mammud uh professor uh doctor
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of law I will translate your speech dear colleagues, dear friends, ladies and gentlemen, social justice and digital economy 2026 tokenization and impact on the real economy.
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Measure week shortland. Fore it's a great honor for us uh again to bring together one of the platform leading academic practicing lawyers, economist and representative of financial sector from Ukraine, Canada, Switzerland and United Kingdom and Estonia as well and other countries.
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Uh the geography of participants confirmed that issues of tokenization and the development on digital economy today represent both global challenge and the global opportunity.
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uh as I told before uh uh it's first third conference hel held with the support of volunt of institute of economical economic and legal research of national academy of science of Ukraine.
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But for our institute, it's extremely important to share an international academic space and and forecast in which fundamental research and practical ical solution to the modern economy.
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Combinate Today Ukraine is going through a difficult but historically session period just this night was very uh huge bombing shahad missiles attacked Ukraine but we still working and and we continue working uh in process of postwar recovery. A K
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role belongs to the development of modern technologies uh and proper legal support for economic transformation.
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Strumentch uh it's firstly innovation digital financial instruments transparent regulatory mechanism and integration into the European legal space that form the foundation of sustainable and competitive development.
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Uh tokenization is not only a technical phenomenon. Uh it's a process that connects the real and virtual worlds uh tangible assets and digital rights traditional financial mechanism and innovative models and investment.
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uh today we are see and been actively uh actively studied by u academia and many in many countries practicing lawyer require a solid academic background foundation uh for professional works and in this field. While the financial sector is conducting large scale
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experiments, testing new business models and capital raising instruments as well. Financing. uh Ukraine moving along the part path of European integration must develop the best legal and academical frameworks uh in the field of modern finance. Uh our conference is dedicated
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uh firstly to this uh to forming and inter disciplinary dialogue and uh development uh scientifically grounded approaches uh to the regulation of tokenization framework of tokenization uh of real world assets as well uh as to fostering trust, transparency and
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sustainability in In the digital economy, U I'm convicted that today discussion will contribute not only academic change but also to development of practical recommendation for legis uh legislator uh MPs regulators, businesses and the professional community. I wish uh and as
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our previous conference show to everyone, it's support to uh to achieve this Uh I wish you to all participants productive work meaningful presentation, professional inspiration and new international partnership. Um and good luck for uh achieving your best idea and your best
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project. Conferencice and digital economy 2026. Uh I here we declare the third annual international scientific and practical conference social justice and digital economy open. Thank you for your attention. Uh thank you very much.
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Thank you. Thank you very much. Um and u we are uh very very happy and fortunate to have uh our next speaker and co organizer as well uh head of Ukrainian modern digital science uh Titan Mitrianka Dr. Tanad Mitranka
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welcome to speech. Thank you very much Alexander. Uh dear colleague, dear speakers and dear friends. Um good afternoon and uh welcome to the uh thought uh and all international conference social justice in the digital economy 2026 tokenization.
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Uh on be on behalf of Ukrainian model duties and science, I would like to warmly thank the Ukrainian National Bar Association, the Varentine Mut of Institute of Economic and Legal Research and all our international partners for organizing this conference together. We
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are very happy to see so many expert from different countries join us today. Um we are living in the time of very fast digital transformation. New technologies are influencing how we work, how we invest, how we own property
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and how we trust financial system. One of the most important development today is tokenization.
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uh in simple world tokenization means turning real world assets into digital assets. This uh can include real estate, company share, art infrastructure and other type of property. Uh what used to exist only in uh paper document or traditional uh systems can now exist in
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digital form. This change is already happening and and uh it is happening quickly. Tokenization can make markets more open and more accessible. Uh it can help small investor participate in markets, make transaction faster and cheaper, increase transparency and
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attract international investment. For Ukraine, this topic is especially important. Our country is rebuilding and modernization at the same time. We need a new tools that um can support investment, transparency and economic recovery. Tokenization may may become of uh one of these two. But every new
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opportunity also brings new risks. Uh when new technology appear, legal system must adapt. Lawyers, regulators and policy makers uh now face many new question question uh how do we recognize digital ownership? Uh how do we protect investors? Uh how do we prevent fraud
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and financial crime? How do we make national rule work together with international standards? This question uh cannot be solved by one uh country or by one professional alone. Uh they require cooper uh cooperation between lawyers economist technologies compliance experts and academic. This
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conference is exactly about such cooperation. The title of our conference include an important idea uh social justice.
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Technology should not only benefit large company or advanced economies. It uh should create opportunity for more people and support fair economic growth.
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Uh if implemented correctly, tokenization can wide uh access to finance, support startup and small businesses, increase uh transparency and build trust in markets. But this uh will only happen if we create clear and responsible rules. Today we are uh very
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pleased to welcome speakers from Ukraine, from United Kingdom, Switzerland, Canada, Estonia uh and the European Union and other countries. This shows that the topics of tokenization is global. Each country uh has its own experience and legal system and by
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sharing knowledge we can learn from each other and move faster toward better solution. Dear colleagues, the future of digital assets depends not only on technology but also on cooperation, dialogue and uh trust. We hope um we hope that today's discussion will bring
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new idea, new partners uh partnership and practical solution for the digital uh economy. Thank you very much for being uh with us uh today. I wish everyone an interesting and productive conference. Thank you.
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Thank you. Thank you Tiana. Uh uh it's a really really pleasure today to introduce our next speaker a top level international expert in securization uh stock market legal regulation from Canada Barbara Kendrickson and for my opinion one of the best uh legal expert
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in west part of world for crypto regulation and tokenization as well. Barbara, welcome. I will share your presentation. Yeah.
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Okay. Thank you. Um so, uh before I get started on the um presentation, so thank you very much for inviting me to speak today. Um just a little bit about my background. Uh so I am a securities lawyer here in Toronto.
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Spent a number of years at the Ontario Securities Commission, which is uh in Ontario. So um one of the larger securities commissions in Canada. Uh worked for a number of years with an international law firm. Uh was a partner
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in a national law firm here in Toronto. And then for the last 10 years I've had my own uh law firm back securities law.
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Um so um I first started working in this space um uh probably around 2017 2018 in the early days when we were still considering whether um and I'm going to refer generally to cryptocurrencies um uh digital assets etc as uh uh crypto
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assets because that's the way we frame it here in Canada. So at that time we were still trying to determine if um uh these assets were actually securities or derivatives and therefore subject to our securities legislation. So um over the
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years I think we have developed here in Canada very robust uh regulatory system for crypto assets um which meets uh a number of the the criteria that um you know have been identified already on this u u panel as important to any kind
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of successful um uh foray I guess into um cryptos. Um so I I note that the um in the title you have tokenization um as the um as the topic. Um in Canada uh tokenization would be a part of our
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general overall securities regulatory regime that I'm going to be speaking to. Um and so I don't deal with tokenization as a concept specifically although at the end of the presentation I will speak to some initiatives on tokenization in
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Canada. Um uh so um uh just uh on a personal note uh my maternal grandparents immigrated to Canada from the Ukraine about a hundred years ago. So it sort of shows the deep roots roots um that uh Ukraine
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and Ukrainians have in in Canada. So I think that's worth mentioning. Um so if you will go to the first slide that would be great. Um so just as a general overview in Canada um we uh regulate securities and derivatives um through 13
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different sets of rules and laws. So in Canada we have 10 provinces, three territories and each of those um jurisdictions have their own regulatory regime. Um however uh what we have done in Canada is we have a um an a and a an
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association of securities commissions across Canada that's known as the uh Canadian Securities Administrators the CSA and so going forward I will not speak specifically about the Ontario Securities Commission which is the Securities Commission here in Ontario. I will talk in general terms um in terms
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of what the CSA is doing in this area. Um so next slide please. Um so as as I mentioned uh proincially securities and derivatives are are are um regulated um provin sorry provincial uh securities commissions uh regulate um crypto assets
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in Canada. Um and again I won't go into the whole range of ways that these assets are referred to. I have a couple here. cryptocurrencies, digital assets, I don't have it there, stable coins, co coins, bitcoins, NFTts, um other tokens,
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um uh transacted directly on the blockchain would fall under this general, um uh category of crypto assets. Um and so we have a very robust securities regime in Canada generally for all securities and derivatives. And we the the regulatory scheme in Canada
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for crypto assets encompasses all of those requirements. So I'm I'm not going to go through um so this is a somewhat of a technical presentation. I'm not going to go through um all of the provisions of Canadian securities laws
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that apply to crypto assets because we would be here for a few weeks. So I'm giving a very high level just touching on how we how uh our Canadian securities um uh uh securities commissions have developed the regime in Canada and
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pointing to some of the highlights of that regime. Um also in Canada um our Canadian federal government regulates aspects of crypto assets um and I I'll speak about that a bit at the end uh towards the end of the presentation as
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well. Now the federal government does not have jurisdiction on the uh security side but they do have uh jurisdiction on on the uh financial services products side and so there is that overlap uh with respect to um crypto assets and and
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and I think in retrospect has made them somewhat more complicated to regulate um but I'll go through our regime in that regard. Uh so the next slide please.
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Um so the focus of the um regulation in Canada initially was on on platforms. So um crypto assets are are traded uh through online platforms um which we refer to in in in our securities um regulatory regime as crypto trading
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platforms or CTPs. and and those platforms facilitate the trading of securities and derivatives. Um these platforms are subject to securities laws. Now this as I said before the regulation in this area has evolved over the years. Um so basically in Canada a
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crypto trading platform has to be licensed or registered um proincially uh initially and then um uh now also has to be registered through um um the the Canadian investment regulatory organization zero uh which represents all investment dealers in Canada. Uh
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next slide please. Um so certain crypto assets in um and I think this is pretty universally um uh followed or regarded uh so certain crypto assets such as Bitcoin, Ether, Bitcoin Cash, Litecoin are considered not to be securities by the CSA when
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bought um and held directly. So we've already carved out that certain um crypto assets are not securities. And so in some respects uh you know uh the tendency is to deal with them as as currency and hence the federal
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regulation in that area. Um so but importantly um where you have a derivative where the underlying asset um uh is something like Bitcoin um those derivatives are considered to be securities. So um even though these different Bitcoin, Ether, Bitcoin and
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Ether um products are not securities, anytime that you deal with them in the context of uh trading contracts or instruments, they will still be covered.
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Um so uh part part of the reason for this is we do have a carveout out of our derivatives legislation relating to spot trades. So um and I I'll deal with this a little bit later but uh spot trade of
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one of those entities uh they're treated like currencies and so um they're not specifically um dealt with under the securities legislation. So un unless there's another activity related to the issuance or the the trading of that that um product. Um so u
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u I won't go through all of these um u points here but I I guess the important thing to keep in mind from this slate is even though we have identified bitcoin for example as not being a security um
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most activities regarding uh bitcoin in Canada are regulated. So uh new slide please. Um so when we when I I mentioned that initially we went through the the um exercise of our crypto asset securities and therefore subject to our
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legislation. Um you know we did that almost 10 years ago. But the way that we came to the conclusion that they were securities was primarily through this application of the investment contracts test. So under our legislation and this
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is uniformly across Canada when uh something is an investment contract then it's considered to be a security and that test was used to really extend the jurisdiction of our securities uh regulators to uh crypto assets and I've set out the test here for your
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information um but uh basically and it's it it is derived from Supreme Court of Canada um um case Pacific coin and it's where there's investment of money in a common enterprise with the ex expectation of profit and where the
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profit is to be derived in significant measure from the efforts of others then in Canada we consider that to be a security so it's a very broad test um and as I said was applied you know initially to for the securities
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commissions to extend jurisdiction but is still relevant today so for example on the you know the tokenization side of things. If you come forward with a product and and you know there's some um um uncertainty as to whether that
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product is subject to securities legislation, you would apply this test. And if and it's obviously been expanded in the uh uh case law, it's been expanded in guidance from the CSA. It's been expanded in decisions of CSA members. But that's the basic test. Um
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so um can you we go to the next slide please? Um so th this is uh I just make a note here that this has been um applied to NFTTS right so FTS in Canada can be securities um and you know the the
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investment contract test has been expanded one uh somewhat uh to include several criteria including is there a capital raising component? Um uh do the number of tokens uh relate to the purpose of the tokens? Are the tokens uh expected to be traded on the
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secondary markets? Um so these are these are these are other considerations that come into the application of this investment contract test. Um uh so uh and I also have an example here and I I've already spoken to this uh
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even where the original um um crypto asset like Bitcoin was not a security um activities relating to that security like exchange traded funds um are regulated. So that's a that's an example of how expansive our regulation can be.
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Uh, next slide please. So, I'm going to I'm going to say a bit about the registration process in Canada. So, it it has a lot evolved over the years. Um, so this is the registration of crypto trading platforms. It has evolved over the
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years. Uh I think we've got to a place where that process is pretty well uh firmed up but um uh in the initially um what ca what happened is a number of years ago sir as I said the Canadian
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investment regulatory organization um um prepared a joint paper with the CSA on how to regulate um crypto assets going forward. And so the idea was that eventually all of these platforms that trade crypto assets should become members of zero and be registered in the
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category of investment dealer. Now um there are number of dealer categories in Canada. I won't go through them all but the investment dealer category is the most rigorous. Um so the the idea was the end goal would be all of these
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platforms would become um uh investment dealers. Um but recognizing the nature of the um industry I guess and the the the huge development wave that happened um the CSA extended to u platforms in Canada this option of uh being
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registered on an interim basis uh as restricted dealers. Um so again a restricted dealer is not as ownorous of registration as an investment fund dealer but it started um bringing the platforms that you know at one point there were a number of them that were
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operating in Canada that were not regulated into sort of the regulatory fold. Um so uh we started with this restricted dealer registration. Um, so I'm not going to go through the whole whole process or uh with the uh of the
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restricted dealer registration, but even though it's not as restrictive as the investment dealer category, it's it's actually still ownorous. And the application of that initial interimm step of being registered as a restricted dealer really um u eliminated a lot of
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potential platforms from the Canadian markets. Um and you know people will have views on whether that's good or bad but um from a regulatory point point of view it was good because I think the challenge initially was just to get a
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handle on on the activity that was going on with Canadian um uh residents and try to sort of put a box around that activity in a regulatory sense. Uh so um as I said restricted dealers undergo a a
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rigorous registration process and once they're registered they have to comply with a number of conditions that would apply to any other uh dealer in Canada.
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Um and these include you know implementing c certain controls to protect crypto assets and funds including uh custodians uh managing the risks um you know including cyber uh security protections limiting the types of crypto assets traded trading. So I
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mean I think I have three points here uh oh I have some in the next page. Can we go to the next page please?
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um meeting obligations. Other other uh OB conditions placed on these restricted dealers including included meeting their obligations to clients uh delivery umformational requirements um and requiring that performs located platforms located outside of Canada that provide services to Canadians must also
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be registered in Canada. So I have I think uh like five or six points here or six points but really this whole presentation could be about those requirements. So I I I I don't want to um I just want to emphasize that I'm
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very high level here, right? So there's a lot of material um on this regulatory area in Canada. Um so so basically um uh dealers for the most part or restricted dealers in the crypto um asset space uh were given a 2-year period to um uh make
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a an application to zero for membership and to the securities commissions and to achieve a full uh investment dealer status. Uh so uh once and I'm again I'm not going to go through the requirements of investment dealer which are more robust
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than um the uh securities uh sorry than restricted dealers but um could we just go back to that um just go back one uh Alexander do you mind going back one to number eight?
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Yeah. So, um, sorry, back to nine. Pardon me, my mistake. Um, so, um, the zero requirements include stricter asset custody rules, uh, robust cyber security, detailed accurate reporting, um, specific auditing, uh, and c custodial standards, and regular appointing. And sorry,
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thanks. Now, Alexander, could you go to 10 please? Um so I I think I've kind of referred to the fact that this has been a work in pro progress and initially the real challenge was to to um you know extend a
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regulatory regime to all of the platforms operating in Canada and uh to encourage them to come forward and get regulated. not to put them out of business, not to make it um too hard for them to be in business business, but
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just to get them into the regulatory um regime. So, one of the things that the CSA did in uh 2022 is they introduced this concept of a pre-register pre-registration undertaking. And so, this was actually before people had to
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get or had applied or were in the the um process of applying for a restricted dealer application. And so these pre-registration undertakings were fairly straightforward compared to the the dealer registration process and and platforms could just come forward um
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and uh registered with the OC under this uh this uh scheme or this program and uh then they could continue uh operating in Canada pending getting full registration status. Um and so a lot of people undertook this and the uh CSA gave
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different deadlines and the bottom line is is that if people didn't at least come forward all of these platforms operating in Canada if they didn't come forward and um apply for our pre-registration undertaking they were all well they were they were all shut
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down and for the mo most part they were all shut down. Um so um we have a very rigorous surveillance system here in Canada uh to ensure compliance with securityurities rules and so basically the uh CSA went out in 2022 and said
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okay if you're out there come to us agree to these undertakings and we'll let you continue to operate till you get into this registration process. Um so um currently in Canada uh and I might add out of hundreds if
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not thousands of platforms at one point um now I I don't have the details on that and I don't mean to um exaggerate but certainly hundreds uh currently we have five um CTPs registered as restricted dealers um five as investment
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dealers and now one operating under a pre-registered undertaking. So, u as you can see, uh there was, you know, substantial culling of of what was going on in um in Canada, particularly given our proximity to to the United States.
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Um so I I think our securities commissions were very very successful in um um and certainly not perfect today but very successful in developing a regime.
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Um, and I I think, you know, I'm Canadian, of course, and I'm I'm proud of anything that we do here in Canada, but I think it is a forerunner of regulatory regimes um uh internationally. Um and uh certainly
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something that is designed to keep investors safe, make them feel comfortable uh you know entering the uh crypto asset market and and trading with the same protections that any uh investor in Canada of you know uh equity securities or debt securities would
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have. So um can we go to the next page please? Now um I just want to say a bit here about asset management and investment funds. So what I said earlier is the whole extent of our regulatory regimes
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applied to crypto assets as modified uh to make it appropriate for for crypto assets. Um and there's a lot of uh rules in Canada. There's a lot of guidance.
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There are a lot of policies that speak to that. Um but one example uh one example of of this is um I call it collective investment structures here but you know funds uh that um uh that are formed to invest in
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cryptocurrencies. So we have a very extensive investment fund regime in Canada and um the note I'm making here is that if you um operate or you want to create an investment fund in Canada uh you will require a um investment fund
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manager and portfolio manager registration um and also possibly an exempt market dealer registration but more specifically uh you'll require these two two registrations. Um so there has been um in the last couple couple years in particular um a lot of attention paid to
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investment funds um um and uh the we have developed rules u in specific policies and amendments to existing uh securities rules uh applicable applicable to investment funds. And so I've just given here um two examples of um uh investment funds. 3IIQ
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that was the first North American um exchange listed Bitcoin. Uh they issued the first North American exchange listed in uh Bitcoin and Ether funds. And in 2021 um um a dealer here Purpose Investments um uh obtained approval for
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the first um international actively managed uh crypto-based ETFs. So I I I feel that our regulatory regime has uh given rise to more sophisticated products in this area. Um and so that has been another positive aspect of our
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regulatory regime regime. So can I go to the next um slide please? Now um I'm not going to deal with marketplaces exchanges and because there they are different in can under Canadian law from what I've been referring to as
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platforms um or crypto trading platforms. Um so basically um um platforms do not provide for the resale the the trading or or sorry they do not provide for the trading amongst investors of um of uh of uh crypto
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assets and if if it is a buyell type of arrangement in Canada those are regulated as marketplaces.
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So I've been talking about the dealer registrations up to now me mentioned the portfolio manager investment fund manager u registrations and now I'm talking about another registration in Canada and that's a marketplace registration and so marketplace is defined as a facility that brings
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together buyers and sellers of securities of which crypto assets are securities brings together the orders of securities of multiple buyers and sellers and uses established non-discretionary methods under which the orders interact with with each other. So, we're just talking about an
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exchange, the the TSX, you know, in Canada that TSXV, the CSSE, uh if you have that kind of a platform, then you're regulated under the marketplace um exchange um um regulatory scheme in Canada, which is complex. Um and um so
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the platforms must register proincially um and then they uh also become um members of zero. Uh so these marketplaces are subject to the same regulatory controls more or less as any other exchange in Canada. Um and so it's strict
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operational system controls, access and fair play rules, stringent custody and asset protection preventions provisions, uh detailed market reporting requirements and trading and product rules. So they're regulated like an exchange. So this is like one step up in a sense in terms of regulatory review
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and regulation, but again u provides for a an exchange environment for investors that they can rely on. Um, so in Canada, we have a number of marketplaces. I've listed them there. Coinbase, um, oh, I've got Coinbase twice. Um, uh,
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Payward, um, uh, Forest, ADAC, and Endax. Um, so just, uh, pardon that typo there. Um, I I probably missed out one, and I've got Coinbase twice. Okay, can we go on to the next slide, please?
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Um so I want to say say a word about stable points. Um so we our RCSA has undertaken a pretty robust examination and uh developed uh which is still in development a regulatory regime uh for stable coins or as we've referred to
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them in Canada as value reference crypto assets VRCAs. Um, so they're defined by the CSA as being designed and promoted to maintain a stable value over time in in relation to a reference asset.
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There's a bit more to the definition than that, but I'll leave it at that.
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Um, so uh the CSA have indicated that these VRCAs or stable coins may be characterized as securities and or derivatives and subject to securities legislation. Um so basically we've developed a system here and it's it's it's an undertaking
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system uh until all of the regulatory um uh components are finalized that uh that they're going to allow subject to terms and conditions the trading of certain BRCAs that are reference to the value of a single fiat currencies fiat back
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crypto assets and have provided an interimm framework for um platforms proposing to allow customers to buy or deposit um uh uh stable coins or BRCAs.
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Um so these terms and conditions include having a reserve of assets with a qualified custodian, public transparency of information related to the V BRCA's governance operation and reserves of assets among many others. And so so far in Canada uh um two issuers have come
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forward and entered into these undertakings and one is uh circle internet financial USDC's um and um uh QCAD digital trust um uh QCAD tokens and they've uh entered into undertakings and then um QCAD digital trusts have also uh obtained exemptive
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relief to offer these um crypto assets to investors. So the next page please. Um so I just wanted to mention ATMs in Canada because we do have um it seems like practically every corner store has an ATM in it that um um sells crypto
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assets. Now this is something that's regulated federally uh because well there's a dual jurisdiction here but primarily regulated federally and the idea is is that a crypto ATM which is a kiosk obviously that facilitates a transaction between a crypto asset
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platform to convert a fiat ind uh currency into cryptocurrency which is then deposited into a digital asset. um um is subject to first of all federal regulation and then secondly securities regulation in certain circumstances. Um so if if all that the ATM does is
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immediate delivery of a crypto asset um that is a commodity to an owner's crypto wallet, it would not be considered to be a security and therefore not subject to securities regulation. However, if um that ATM was uh u providing access to um
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certain crypto assets, they would be considered securities. So, for example, um a stable coin type uh product um uh which itself is a security or derivative um would be subject to securities regulation. So, for the most part, you
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don't see um you don't see products in these ATMs that would be securities, I guess, is the uh easy way to say that.
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Um so, next page, please. And Barbara, can I uh can we ask you finalize for next five minutes, please? Thank you very much.
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I will. And I I'm almost finished. So, um Okay. So uh the the the rest of the the presentation just has to do with um the federal regulation. So um under our federal legislation dealing with um money laundering and and terrorist
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financing uh uh there is a requirement that um any um firm dealing in virtual currencies or providing a crowdfunding platform services must be registered in Canada's money service business. Um, and we also have a provision for any foreign
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company that does that type of business in Canada. Um, they're considered to be a foreign money service business. They both must register with uh the federal government and they're subject to suspicious transaction reporting, terrorist reporting, large cash transactions,
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um large ver um um large ver virtual currency transaction reporting and um EFT reporting requirements. Next page, please.
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So, uh, while this is primarily regulated federally, uh, British Columbia and Quebec also have their own, um, money service legislations, um, and our, um, our FINTRA is the, uh, is the entity that regulates, uh, this area.
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And, um, they've been very active on the enforcement front. And one of the most notable um penalties was given against Binance in 2024, which was a $6 million penalty for not uh reporting. Uh so next um slide please.
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Um, so the other thing I just wanted to mention is, um, the federal government has recently last fall released draft legislation that would, um, establish a framework for regulating stable coins as currencies in Canada. So, this is still
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in the works, but um, it would only apply to um, stable coins that do not meet the definition of securities or derivatives. And I've got details here of how extensive the Bank of Canada, which would be the uh regulator um will
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regulate those stable coins as currencies. So I'm going to go to the next page 18. Now quickly here I'm getting to my tokenization. I'm running out of time. So right now um the CSA has initiate initiated a project
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tokenization which um examines the um um the the expansion the the regulation of tokenized financial products in Canada and how that intersects with um Canadian securities um legislation. So I have a a definition of uh here of tokenization
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which I don't have to go through. Um and so the CSA is currently examining tokenization across the fund fixed assets, fixed income and market infrastructure areas based on international standards including uh or or models um identified by OSCO and
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others. Um so the CSA specifically is looking at um uh investigations into the trading of debt instruments in digital form. How investments funds might be issued and managed using tokenization.
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How tokenization might change the the way interest in private funds and other private assets like real estate and uh resources are structured and held. how tokenization may re reshape market structure including tokenized settlement mechanisms, clearing and custody implications and the use of um uh
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tokenized collateral and repo market applications. So um next page uh so yeah so that's it and then the page after if you don't mind um um Alexander.
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So that's it. So thank you very much for listening and there there's a lot more a lot lot more under all of that Barbara thank you thank you very much uh maybe someone has some question uh and we are following to our schedule
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uh I'm very happy uh to intro introduce our next speaker professor Raman Madanik uh uh I will show you your presentation or Yes. Yes. You're good.
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Thank you. Okay. Just give me a few minutes. Uh Roman, one of the biggest expert in Ukraine law and brilliant mind who uh great uh digital assets in um our civil law. So uh just give me one minute for
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open your presentation and share it for everyone. Something was broadcast. Sorry. Uh Okay. Uh uh Roman you can start. I I just Alexander I'm I'm glad to see dear colleagues. Thank you very much Alexander for this opportunity to take
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part in in this very important for us conference and my congratulations. So uh my report is devoted to the issues concerning the concept uh nature legal nature and titles of digital property under Ukrainian law. Um, digital property uh in the form of crypto assets
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by its nature could be treated as a digital records uh on a blockchain or other distributed ledger which represent a right or property value.
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So in that context we could uh talk about the tokens or tokenized assets um which are the objects of civil rights reflecting a global trend in modern private law towards the formation of unified approaches. Thank you. Yeah. uh
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approaches to these object as a special type of property. So uh next please. Uh and once more yeah next please side. Yeah thank you. So uh in that context it's very important uh to uh to talk about the trends under the
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Ukrainian law in that context. Um the pecularity of the Ukrainian approaches is that uh under the civil court of Ukraine we have u normative u uh provisions about the digital things or digital assets as as a very broad understanding of the
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tokens. So uh under the UK under the civil court of Ukraine um a digital property is an asset that is created and exists exclusively in a digital environment and has property value. So um therefore uh we could uh
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talk about the um general approach of the Ukrainian legislature which provides the idea uh about the most uh um big or most uh um most very not a easier uh understanding of in that context of the uh of the digital assets. But um uh we
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could talk about the some pecularities which are based on the characteristics or criteria or legal nature of the digital assets. Um, next please. Next slide. Yeah, thank you. So, uh, we could talk about such characteristics of digital property.
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Any digital assets or digital property could be treated as intangible property. property value, controllability or contra controllable object transferability and such object object exists exclusively in a digital environment. Uh so uh um we could talk about such five
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pecularities uh which uh could treat uh such object object as a digital digital property.
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Next one please. Um it's very important that Ukrainian civil court provides not only concept but as well types of digital property under the Ukrainian civil code digital property uh virtual assets, digital content and other goods to which the provisions
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of part one of these article apply. So we could talk about the so soal open list of these digital assets and therefore we could talk about not only crypto assets as but uh the elements or types of digital assets
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are as well another digital objects. Next one please. It's very important to talk about the legal nature of digital property. The particularity of the Ukrainian approach in that context is or are provisions uh about the understanding any digital property as a
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thing or tangible property. uh but or unless another is provided under the law or is uh provided uh by the by its nature of the uh concrete type of digital assets. Therefore, uh we could talk about the general
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presumptions that any digital assets could be treated as a tangible assets or could uh uh could be treated as a object to which could be used provisions on dig digital on tangible assets.
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But some types of digital property could be treated not as a tangible assets but the depths or another objects of civil uh rights.
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It depends on the nature um of the digital assets or it depends maybe on the provisions of the law. Next one please.
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Um it is not reg not regulated uh by uh uh any provisions of Ukrainian law. Uh the issues of the about the legal titles on the digital assets. I mean the issues on ownership on possessions or another types of control on such type uh of
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digital objects um under the provisions of the law Ukrainian law on virtual property virtual uh property um digital virtual assets or um crypto assets they are treated like a type of ownership.
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So um under the Ukrainian law such type of digital object could be treated as object of ownership.
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So um in that context it's very interesting that uh we don't have um any provisions which could uh um treat as a example of the pecularities or another provisions which could u make more clear such provisions because general approach is that uh object of
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ownership. Ownership could be only um object like a physical object but not the digital uh digital uh property. In that context, a Ukrainian legislature use uses such um like uh legal fictions.
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So another one please. Um, Ukrainian legal doctrine justifies the admissibility uh of introducing ownership to digital property that are legally equivalent to tangible property. Um an example of such digital property is unsecured crypto assets which uh can usually be subject of ownership.
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The circulation of digital property that are subject to contractual rights of claim should be carried out in accordance with the rules on the assignment.
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uh of rights session of rights. Um examples of this group of digital property include digital content, domain names and account records. Next one please.
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Um for Ukrainian law is the issue about the possession of digital control is the issue which is not enough regulated.
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Uh because um on one side under the Ukrainian law on virtual assets um Ukrainian legislature uses the terms which uh talk about the possession as a admissible title on virtual assets. Under the provisions of this law, the holder of a virtual asset
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key is the possessor of such virtual assets. Except in the cases where the virtual assets key or virtual asset is held in custody by a third party in accordance with the items of the transactions.
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um between the custodian and the possessor of these virtual assets. And another uh situation um which uh provide the relations when the virtual asset has been transferred for uh safekeeping to any person in accordance with the law or
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court decision that has entered into legal force. And um another situation uh in that context is related to the virtual assets key has been acquired by a person unlawfully.
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So we could talk about the perm uh about the provisions of such law which provide the situation uh regarding the possession to digital uh property in the context of digital um virtual assets. I mean um I mean the situation uh about the crypto
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asset. Next slide please. Um currently uh we have a situation we are in the process of recordification or modification of the civil court of Ukraine. Therefore uh it's very important that uh um the others of these draft I mean a new
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civil court in that context they propose to provide a new category of the possession uh I mean the digital possession under this bill uh this proposal uh provides that uh the provisions of this code on possession shall apply to digital
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property unless otherwise provided by the court by this court or law or unless it follows from the nature of the digital property. Possession of a digital property is exercised through control over the uh through through control over it by the person who
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considers it to be theirs. Control over a digital property is the actual power to prevent others from obtaining all the benefits of the digital property to obtain all the benefits of the digital property and to transfer all powers
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relating to the digital property to other persons so-called change of control. I have to say that this concept I mean concept of the digital possession uh is um or use uses the main idea which was formed in the draft or concept of the
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unidora um about the uh digital assets and um In this cont in that context we talk not about the classical type of possession.
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We talk about the so-called possession because uh actually we talk about the control on digital assets. But the pecularities of the Ukrainian approach is that actually we talk about the type special type of possession um which is related to the special
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object I mean to the crypto assets or another digital assets. Therefore, uh uh a novel uh approach of the Ukrainian uh doctrine is that we talk about the possession but not about the type about the control as a new type of uh
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pairing out of the actual control. Um next one please Alexander. Um control is confirmed confformed uh by demonstrating the identification requirements specified in in the parts two or three of this article. Change of control includes the replacement modification
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of this object of control. Acquisition of possession of a digital property is confirmed by a person demonstrating compliance with the requirements for identifying them themselves as having control over the digital property. Next one please.
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Um to sum up uh this presentation, I have to note that uh Ukrainian law have informed the concept and legal regime of digital property as any controllable digital object which could be qualified as property.
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And um currently Ukraine is in the process of developing special legal provisions, legal doctrine and code practice regarding the civil circulation of specific types of crypto assets and other digital object which could be classified as digital property or another digital objects. But um
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we don't have any specific any special legislation which could be enough for the carrying out civil circulation in full-fledged regime for tokenization. In that context uh I think for us is very important uh situation and developing uh of the
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legislation for example in Canada in the US and in other countries which uh as I understand from our colleague they uh uh prepare full-fledged uh laws in that context in and in and therefore I think that the uh
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use of good or best practices in from another countries is very important for Ukraine and I hope we will have uh the provisions of the law on virtual assets which I hope will be in forms in some time. I hope maybe in half an hour or
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maybe a bit later. Thank you very much Alexander. Thank you. Thank you very much uh professor u and um for continuation and for wider uh idea of your uh speech in last part of our event after three speakers will
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be joined to us Alex McFersonson I see you al but you will be after uh after buru or together maybe two yeah we're speaking together So, we're we're doing the presentation with me first and then passing on to her. Um, I
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don't think she's ready to join because she's still teaching at the moment. Yeah, I know. You have a lecture now.
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Yeah. So, so I'm I'm okay, but she's teaching, so she's not quite ready yet.
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Oh, super. Thank you for joining. uh because uh now in Ukraine we have a same situation like you in Scotland because you are uh system of Roman law, continental law with huge impact of common law and also you are on the way
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and search and looking for uh real uh adequate regulation forecast for digital assets. uh uh and Roman Mandanik he just finished it on presentation one of the outer of conception of digital uh uh digital rights digital title uh of
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property in civil code of Ukraine. So now uh we are in uh in one side uh of theoretical war and theoretical research for understanding how it work in real and Barbara uh told to us Barbara Hendrickson from Canada. She told to us
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how uh tokenization and digital world works in Canada according to uh security law. maybe like a market of securities. Uh our next speaker will be Vlad Tun his Ukrainian Swiss land uh project global ledger and we uh together
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will show to you our experience how investigate uh fraudization. Uh we just finished it one uh legal opinion for criminal court in one big country about 200 million frauds him uh using tokenization and we find uh u this him and open this
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him using his his experience because I'm just advocate lawyer and co control just legal uh issues in this investigation but uh let us love Happy to meet you. Uh and please please show show to us your practical approach. And next speaker
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after ladislav will be also pra with practical uh cases Danielski from Estonia and half of Ukraine with practical cases of tokenization and marketplace for tokenization of real world assets. So um I'm I'm stop and um let's let's talk.
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Sure. Sure. First of all, hello guys. Uh this is an honor for me to speak within you. Uh me myself I vice president for forensic within global ledger. Global ledger is a Swiss company that was originated from Ukraine. I'm also the
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expert for Ukrainian modern digital science as well. And uh my main occupation is cases that Alexander brings to me talking uh and education the law enforcements and those who need um let's say so they need knowledges for investigations those could be their
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compliance officer where I'm participating in a part of teaching them how to find an asset how the technology works and etc but mostly for things like forensic and counterterrorism uh why are they all united how the process looks like and where are the
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problems for us people who work with onchain uh investigations are laying so you can help us to resolve them I will for right now so uh in here you see my working cabinet let's say so it's the monitoring section so for me the things
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I don't look at them through the law like are they legal are they not illegal and so on for me they're just uh parts of certain technologies so the technologies that we can trace they are limitless. Some of them can be
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traced way easier, some can be traced harder. There is per now no regulation for any kind of technical requirements or technical capabilities of any blockchain. So the first situation, first problem that we can have here the adoption of the chains that are not
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traced per now. So for example last year there was a big um say so a big tour of the telegram over durov through the countries like Kazakhstan and etc asia and they've been doing partnerships with taser so which means that money from
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taser can freely go to the another technology so it will be a same token so from your perspective from legal perspective is the same asset but from my perspective it's whole two different stories because some chains are very new
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there could be uh either few or no way to trace through them, right? So, we have chains like Monero that are prohibited to be listed in most of the areas in the world, right? But we still have chains that are not private, but
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they are complicated um in some ways. So first signal for you that I'm not lying and it's really complicated that there is only about seven companies in the world who have a database enough to uh either work with usual businesses
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with I mean usual AML we're covering the key side your transaction so we kind of obligatory to be used for most of the licensed businesses even on the stage when they apply for a license. Uh second second second second also. Yeah. Uh the
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second thing here that the chain itself could be uh could be just very big. It could be just a lot of funds needed to adopt this chain. As an example for you guys, you for sure heard about Salana
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chain, right? But the Salana chain itself just the weight of this chain is bigger than all other chains that we usually use in finances. and Salana coming from the area where it was not so financial let's say so it even went to
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sleep a few times which I saw would make it unusable for most of the financial institution but now they are a big player in the CBDC or private coins area right private bank coins area so right now we will see a massive adoption of
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Salana as a token issuer as a technology provider for this sphere but storing and working with this technology is very hard because Everything that is happening inside Salana is stored in the same place where your transaction regarding any kind of financial tokens
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will happen. But Salana also support pictures. So it supported games, it support music, other media content which is very big. So uh first first thing first is that some chains are just very hard to work with and that's what we can
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maybe only I don't know maybe some recommendations from the regulators on which chains to use for for example for the banks and so on will make sense because you can adopt the technology but this technology is not adopted on the side of those who
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will actually uncover it for you and provide you with the analytics. That's the first problem. The technologist itself and that there is a lot of technologist. It's not so easy as with classic finances. Second, let me open you just usual report I've been
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working on today. It's scam. It's anonymized scam. I will not uncover you any personalized data. And also I will here mention that for us personalized data is not always needed. So the context is mostly needed for other types
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of investigation. for us and that's the maybe the first myth I'm about to break here is that I'm getting a lot of calls messages uh live meetings where people is looking for like where is the putin wallet where is the sin pin wallet where
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is this wallet how this scheme works and so on in most cases works the same in most cases all of the investigations all of the tokens that we will be looking for basically works in the same algorithm and the same algorithm is the
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connections building the connections in between regulated entities. So we can take information regarding the personality that's standing behind them or uh if we're talking about there is a lot of Ukrainian people here for Ukraine for example we do not have a law or we
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do not have a possibility for the dedicated agency to actually manage the asset that we can take away from is criminals know sanction entities and so on. So for countries like Ukraine where the law is undeveloped I would say is uh
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is also the place where we will store the asset in before we will get it back to the person it should belong to or country it should belong. So for us the license is where the money is transferring through is also the
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carriers meanwhile the court uh is going off let's say. So let's look through this case the information that you can receive for companies like ours and uh iff recommend to work with companies like that and then it goes to mika and then goes to
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hard law let's say so so this uh information that will be provided is the information about the amounts information about how many transactions are associated the certain wallet you're checking you can check wallet you can check transactions you can check the
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whole entity so if it's a licensed entity they usually have a list of wallets they are using. So we can work with this. So we can uh unite them in one cluster and do the let's say so the
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key analyzation or your business analyzation. And as you see in here this section I can navigate through different assets that are attributed to this wallet. So if we're talking about for example NFTs that been mentioned in before they will be also like a separate
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token that you can also trace the tracing of the NFTs is completely similar to tracing of any other assets to everything that have smart contract because there was also NFTs in the bitcoin they've been trying to do NFTs
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in bitcoin how it been working is that uh few tokens for example token A b and c they are forming the NF and there was a legal document that is stating that those who hold ABC tokens is the main
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owner of this NF. So it was like I would say the NFT that exists mostly in mind not inside of the technology. But let's go further. So this scam happened as you see in here and I what I would see I
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will see all ins all source of funds of this world and all use of funds of this world. The source of funds in for me for onchain investigator is a little bit different. For you the source of funds
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is usually the justification that the person acquired the certain assets in a rightful way. But for me it's uh just the destinations from which he received his tokens or his assets. So then we're going to the sync we're going to the
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specific business that is connected with this. And the most important part for us in here is where they registered, where they hold the license. And so licensing is the biggest in my personal opinion is the biggest uh topic that we need to
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talk about and um the harder it is I would say the more important it is. So I will give you again the Ukrainian scenario in here and how it's causing trouble to us. So first of all uh when
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we are I don't know trying to prevent something from happening and we know one person from few persons that are participating in unlawful or terrorist activity we need to look for or somebody is avoiding sanctions and so on we need
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to ask the business about the information that they are holding the QC information IP addresses of the person ID of the person what internal transaction he had and so on. So for me as a person who is going from the
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practical side I see those uh regulations introduced by FATF in 2019 about FASP are like why they don't regulate defy because we can trace through defy we can trace through defy we can create the probabilistic analization that will go through it yeah
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it could be sometimes costy but it's possible but for businesses they usually mix all the assets that going into them and there is no no way for us to connect transaction that are coming in the Binance and out of the Binance without
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the Binance help. Why? Because Binance for example answering for 50% of all the transaction happening within centralized exchanges. It dropped from 70% because DeFi are on the rise, right? But again, nobody is still regulating DeFi so much.
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Why? Because the reason is again about the investigation and traceability of those assets. So for the countries like Ukraine that do not have licensing within their own country and they could not build this proper connection with those licensed entities because for
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example in Ukraine we're always in top three top five list of the amount of the transaction happening about the unique owners that hold more than 100 bucks in their wallet and etc etc. Yeah, we would have a huge leverage on all of the
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businesses around the world to have a registration inside of Ukraine because they at least do 1% of their profits from Ukraine. So as soon as Ukraine will introduce the um registration possibility within our country, all of the big uh exchanges you will see
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acquiring license within the Ukraine. But per now the country who do not have a license within their own country, they're like they're like a bagger let's say. So they're beggar for this business to share some data. We need to add a lot of
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context why we need it etc etc etc which cost us time in situation like Ukraine cost lives as well because more time you know second thing but we need to check the political situation. It really depends on what is the relationships
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right now in between your country and the country where the businesses is registered for. I will not give any kind of examples to do not hurt anybody. But what you see on news basically if we're shaking hands with somebody then the
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businesses registered there will answer us because they know that our national bank can reach out to the national bank like for example they can reach out to bankpana and say that the guys who license D661 are not answering us and we
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have a criminal case and so on. Uh so yeah licensing is one of the most important parts if we want to really control tokens and so on we should have a unified world system in the end it uh
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mika amazing stuff I'm really in love with Mika and that we are uniting all the European countries under one hood let's say so right but there is a lot of hope right now inside of the Mika and a
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lot of the things that it's stating that could be amazing but maybe will not be realized. So we're in this forming stage. But I do believe that the end goal for this stuff will be to unite it all under one worldhood that we will
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unite because again even if everything inside Europe is united nothing will stop me from creating a one-time account or just using the drop or money move if you how you call it and just sending all the tokens that you are tracing to some
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kind of like I don't know chi China authorized uh exchange Iran authorized exchange and something like that and there will be no communication with Iran for sure with China I heard cases where there was communication but generally it's very tough so even if you control
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your jurisdiction a lot it doesn't mean that you have any kind of possibility to get funds from other jurisdictions let's go further with this stuff so I can see every small transaction and in before we've been talking about different kind
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of um scams that you can run within the blockchain basically Everything you have uh in the criminal codex for usual financial crimes is also attributed to the blockchain things like because blockchain is just technology that serves the thing that you already know
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about. So if we're talking about this the we also have a pattern uh recognition system. So pattern we all of those companies that I mentioned to you we have the our own masses and hyperistics for different cases why we
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need to hold those massages of course we need to have those massages just to explaining to the judge why we came to this or another conclusion right but the another problem that I want to talk about and I've been talking especially
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in UK about it and other country is that there is no certification there is no registration for companies like global ledger right the whole world the whole crypto world today rely on the expertise of companies like chin analysis crystal
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global ledger trm labs and few other companies because there is no we are now the first point of information let me demonstrate you something so we will take the sanction sanction boss I would call we will take offic
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for example bit papa all of you heard You can find it out that bit papa is long time in sanctions right but if I will go there and I will really check what is sanctioned.
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So this is the sanction and there is no wallets here. There is no addresses no wallets and so on. Garantex right now on the other hand only after we really fought garantex with huge help of Europe.
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They added the wallets but they added them post facto. So in before uh Europe stepped in there was only three wallets and I have here laying 100 pages on guarantex and they have thousands of thousands of millions of wallets really
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millions like literally. know uh we are in new age where the agencies or regulators entities that are issuing sanctions they don't quite know like who they are sanctioning and people who are watching the news like CNN Fox and so on
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they just watching like okay we are sanction those guys we won we sanction those guys we won with crypto it doesn't work like this so uh that is why it is crucial one of the problem that goes right after the licensing will be the
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problem of licensing the IML providers because the right now my cooperation let's I will end on this my cooperation regarding this case will look like this I'm just a usual business the global ledger do not have any uh leverage on
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other businesses in the world and if we will try we will be out of business really fast but for example I will go and I see that 23% of this stuffs goes to HTC and I will really want to ask HTC
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and to ask what's going on. So I will go to SDX. I will check where they hold licenses. So it's United States, Lithuania, Seashells, and Turkey. Where the number is open, I will see the number. Where the number is closed, I
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will not see the number. But how can I communicate with them? I have no ability to communicate with them. What I need to do, I need to go to law enforcements.
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Law enforcements will initiate the case. They go to the judge. judge will allow them to question this business and to ask for two things mainly the information on the guys that are related to this transaction that will be in
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question for example this one and second thing that is maybe even more important is the output where do where are those money right now so if it will happen for example on Friday and most of hacks unfortunately happens on Friday
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Saturdays Sundays uh holidays summer and so on. Why? Because the judge didn't work usually on the on the weekends, right? You will need to wait till Monday and until Monday again you can do thousands of transactions or at least uh
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the I don't know 100 transaction buying and session coins and so on. So we will always be the guys who are running after somebody who is so much ahead of us. So that's why I think that the real
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gamecher for the whole industry will be since we rely only on a few companies and uh it's from 2019 you will not see Saudi Arabia companies here and so on because it's not about the money it's about the expertise and also about a lot
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of money but um there will be no new companies approaching in one day it's just impossible you need to collect this base you need to verify everything is going on and so on. If we are let's say so stuck on one game game field right we
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can help way more than we're helping right now and the game changer will be to to license AML providers and to give them the um possibility to ask for the outputs so to not share any kind of data
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that could be protected by something like GDPR or anything just to share with us where the money been sent afterwards.
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So we can do the whole investigation in the name of any authority or any country and only then we invoke the government only then we invoke law enforcements and they start collecting IDs and everything that will be a huge change but per now
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yeah now let's say so for receiving funds and everything the technology is here what is not here is um some legal possibilities and if we talk about countries like Ukraine regul relations.
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They're completely not here right now. I think that's all my side for my timing. If you have any question, I'll be happy to help.
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Yeah. Uh maybe not question or just uh brief pass for uh another our next speaker Daniel Welarski uh because he will show to us white part. You show to us black part, black side and crime. uh around around
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tokenization. But if we talk about our last case where we had investigated together, uh it was u in white jurisdiction officially registered but where are tokenization not under law not regulated activities just compliance and you can issue any uh
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instrument any financial instrument. strument under law. uh one of the position of um English law commission three three or four years ago was not regulate uh now uh digital assets don't why because not uh show to market it's legal just if you not have no any
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very straight uh forecast legal forecast for uh digital assets for tokens for tokenization and for digital market entities.
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Um and uh how we can see now uh in all world uh fraud and crime uh crime or organized crime group using this great jurisdiction where uh you can open digital or crypto company but not with very uh complex complicable regulation
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for example like in Mika in Euro or like uh sec security marketing in Canada. Uh and they use this uh uh image of jurisdiction, image of legality for show to customers we are legal, we are working on the law of this
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this country. And after how uh we we are really very surprised because it was very simple scheme. Sometimes uh fraud looks like u strong strong pyramite when few customers uh sharing uh profits between 100 customers you know very
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difficult but tokenization scam tokenization fraud scheme very simple one hot wallet and two three cross payment for wallets for regulated for centralized uh dig digital exchange and just exchange for uh for fiat money and and zero activities, no real listing, no real
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trading in uh open market, we talk if we talk about organization uh through through them um central central and exchange but you told I about decentralized finance defy uh we cannot be sure uh that issue of tokens in defy working
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under law uh that's why we have a question in case of tokenization of real assets about if this real assets have some property title in any jurisdiction or is this legal uh instruments or not in jurisdiction where this located if we
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return to Roman law you know it's it's called it uh lexray vai lexray vai where where are this property located uh in digital world it's very very huge question.
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Yeah. Uh I could add a little bit on DeFi. Just a little bit. Yeah. So, uh with the DeFi as I said before, yeah, they are not so regulated because they are traceable in most cases, right? Uh second is we will
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really stop the development of the technology if we will regulate the defy uh providers because defy is also the technology providers. So you cannot obligate the someone who creates the technology to instantly have so many compliance officer to satisfy every
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business that will go in this technology. So that's why the logic is that technology is not regulated but business is regulated. But we already have the precedent of the tornado cash in 2023 which came in the autumn and in
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the summer there was um guideline from FATF. the comment basically on the guideline where they stated that in case if you will analyze the DFI and you will see that the main purpose of this defy is criminal purpose such as obfuscation
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then you can initial then you can ask them as a usual business and after that the cash guy in Netherlands was arrested. So generally if what are you saying that the main question for regulator if they want to fight the
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fight they need to analyze it and if they will see a major chunk of the criminal activity inside of there well that's already giving them the right to shut it down and unfortunately today few speakers too actually apologize they cannot be
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together with us and after uh after one of our speaker I will show record of u our uh speaker uh about tokenization and smart contract in business uh uh also Scottish lawyer David Christie for from uh Robert Gordon University but he he's
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apologized and just sent record to us. So next speaker will be Daniel Wadelki with very practical approach how uh we can tokenize real world assets.
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Danel please. Yeah thank you. Thank you for thank you for inviting pleasure to be here.
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Well I should explain my background. Um I work in IT internet technologies for 12 years and I understand that still a lot of people don't understand how it works. It's a bit of magic for them.
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uh I'm eight years in blockchain development uh not only the blockchain itself but also the wrapper of the technologies around it because uh all the applications are actually hybrids. You cannot launch now only centralized or only decentralized way. You need a
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hybrid and you need a team of specialists to build it exactly for you. uh the most uh interesting is that I saw all of this evolution from the inside understanding not only user behavior but also u market players how they act what
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do they want and why do they fail so joining with uh the first Bitcoin boom in 2017 then observed uh the boom of ERC20 tokens and decentralized best applications, then the boom of NFT, then memecoins, and luckily for us, starting
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2024, the main uh line is real world assets. But the thing is uh they are also different and they are not related to Bitcoin at all. So they are about commodities, real estate, carbon credits, intellectual property like something
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that actually exists in real world. You just need to make uh representation on the blockchain. And again there are several ways like you can have a digital clone for example for real estate uh or you can make a fractional ownership
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and the value of the asset is also different. For example, for commodities, it's more about speculation like buy low, sell high. For real estate, yachts, racing horses, it's a bit different because you not afraid to hold the token
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because you understand they will bring you dividends and price appreciation. So, it's the most interesting asset uh real estate. First of all, it's a huge market and it's something real and uh it doesn't require any operations to bring
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money to uh investors which are now actual investors. It was a great trick 10 years ago by centralized exchanges to call gamblers, speculative traders with the name of investor. They don't care about the project. They only want to see
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uh multiple access. So now with real world asset tokenization it's about tangible asset but still there are two lines. Somebody wants toize something existing that already brings money like a part of an exit strategy for existing holder.
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Somebody wants to make crowdfunding to build something that doesn't exist and apply tokenization. And exactly because of those layers like how would you like to combine them to satisfy the business needs to satisfy the market players to satisfy the users you need huge
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experience in all the dimensions including the law all these years I told the projects that they are making a huge mistake if they say first I build then I attach compliance it's the way to fail And uh some of the projects were not
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lucky enough to uh to launch early because there is a company called token eye. They come from US and Luxembourg.
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They started building a compliance approach or sophisticated protocol like a set of smart contracts eight years ago but they made it open source only 3 years ago and started involving community to ask everybody who is involved to uh help them improve it. So
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only last year like seven years down the line all the regulators admitted that it's a golden standard to apply regulation compliance tokenization project on design level.
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This means you will not be able to buy a token if your wallet is not whitelisted not by this platform through verified KYC provider or KYB provider.
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And it means that uh in a centralized exchange you can verify yourself as a person from Belgium and then just easily send it to Afghani terrorist because nobody will ask uh about ownership of the wallet. this uh new token standard
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it's called ERC 3643 but the short name is T-Rex and much more beautiful. So with this standard you're not able to send uh the token to a person whose wallet and uh ID is not verified even as a token issuer you can disable
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peer-to-peer transactions. So if you want to sell it, you must interact with smart contract for a secondary market.
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So it's a very complicated and uh very sophisticated tool set that allows you to put all the rules you need because user creates an onchain ID like all the parameters for investors are stored on the blockchain. All the
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parameters for the token like a lock. You program a lock and you give investor parameters as a key to fit the lock. And again there is another layer like maybe you reached the maximum investors. So even if there is a fit he will not be
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able to purchase. Uh a lot of people see that tokenization is another way to be more than in technologies bring hype to the project etc. But for people who build it, it's the way to program all of the logic and
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create true self-service. Because now a lot of tokenization projects are just a spreadsheet on the blockchain.
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There is no entry with self-service. There is no interaction as self-service. It's still data on someone's books, but the books are on the blockchain. I call them quasi tokenization. It's okay. It's early stage. But the thing is with
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expertise of uh my team and actually uh everybody there is smarter than me. So they perfectly can fit any business logic to technology. That's what we were doing for more than six years.
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And uh our approach is not white label like we give uh independent infrastructure actually it's dual because one part is on centralized services and another part is on the blockchain like your own T-Rex factory like multi-level uh multi-million
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business like on both sides and you can own it you can modify it you can have IP rights uh we we favor freedom and evolution.
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So no technical lookup, no uh financial lookup because a lot of players on the market called white labels, they will offer you their business model and charge you for every breath and it's okay like people always want to uh find
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an easy solution. Our solution is not easy for understanding but it's easy when you come to the point that uh you're not in a trap. There is will be no migration pain like you truly own what you build
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because otherwise you will need to start from scratch like reinvent uh the bicycle not only the wheel because bicycle consists of hundreds different parts and you need to understand how to combine them and if you are okay to
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waste uh more than one year to reinventing everything from scratch well okay but you can use white label like easy choice or use infrastructure booster as we call it. So our task is to help businesses feed both market needs
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and compliance taking the technologies that already exist. We just combine them in a unique recipe.
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Uh I'm not sure if I should touch uh any other topic like because like cryptocurrencies are different uh neo banks are different. RWA is not about speculation. It's about uh tangible value and uh decentralization um everybody everybody thinks it's about uh
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autonomous or anonymous users but with tokenization rules you can stay anonymous like you will be always verified and in this case like global ledger will have less work to do.
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Uh thank you Daniel. Uh you you have some ideas uh more. Yeah, I I'm just saying that uh I I really have experience for uh a long time because for example when Barbara showed her slides and it was endox name
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I thought it's familiar. I went to my telegram and saw a communication about induct like in May 2019 uh Ukrainian team as a part of office of French company was taking a care of setting up andio I was the part of that team
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that's why uh we call it it's crypto impact Ukrainian crypto impact because in all famous and great crypto projects in Ukraine. you can find Ukrainian uh footprint, Ukrainian impact and and thank you Daniel uh for your brief presentation, your experience and your
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uh business because you are happy you you help and happy to help to everyone to build tokenization of real world assets. But we are with my team doing uh and go going to provide some special service for verification of real world
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assets. But old times when we start some case or court criminal case or legal opinion about old time I think uh every time which law it's regulated this uh think digital digital assets it's regulated or not or maybe it's mistake maybe it's just some
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obligation Uh so uh falling to our schedule I want to introduction and introduce our next brilliant speakers from University of Abidin. Uh Buru Yukel Ripley and Alister McFersonen. one of the my favorite uh author I'm very very careful
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uh search for all your resources and I will I will share share your presentation and uh thank you so much appreciated Alexander uh I know you also in same way like me to understand what this digital uh law
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what what the digital assets or our talk. Yes, very much so. It's been um somewhat taking over our lives in the last couple of years. So, we're we're deeply embedded now in the world of digital assets and law. Um so, yeah, thank you
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very much for the invitation to speak to you all today. It's much appreciated and thank you Alexander for sharing the slides. So, uh Bertu and I will be talking about tokenization in Scots law.
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As you'll be aware, a lot of the attention in relation to tokenization is about regulatory aspects. But what is also fundamentally important are other private law dimensions. So whether in particular if you transfer a token does it transfer linked assets and that's
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essentially what we're going to cover today. Next slide please. And so first of all after briefly making reference to the concept of tokenization I will talk a bit about digital tokens in Scots law how they are treated the
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relevant rules applicable before moving on to questions of tokenization and the transfer of linked assets and uh upon us coming to the conclusion that reform is necessary virtue will talk about uh the law leenstein as a potential comparator
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Um, and finally, we'll we'll move on to concluding remarks. You may, even though you're not familiar with Scots law, find it interesting as a a case study, and there may be aspects of Scots law that you think could be usefully introduced
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or issues that should be considered in other jurisdictions as well. Next slide, please. Thank you. Um, so I mean, obviously, everyone on this call is an expert in relation to tokenization matters. I've included the initral uh description definition of tokenization here as the
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process of linking physical or intangible assets and digital tokens which are a type of digital asset recorded on a distributed ledger. These tokens represent ownership, contractual rights or other value and you will also no doubt be aware of
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the significant financial growth in this area. But we have here Larry Frink, the chairman and CEO of uh by some measurements the largest asset management company in the world stating every stock, every bond, every fund, every asset can be tokenized.
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So this just goes to show the the potential upside as far as financial development, financial growth goes when um tokenization is embraced. But the question then is well can Scots law take advantage of that? Can Scots law? Can
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Scotland get advantages by utilizing tokenization? And so we're going to consider here whether tokenization transactions are effective under Scots law.
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Next slide, please. There is a bill going through the Scottish Parliament at the moment. It's in its final stage and so is expected to pass fairly shortly. This is the digital assets Scotland bill and it looks at digital assets um including tokens and
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it seeks to clarify their property status to state to state that they are property objects you can own them specifying which type of property they are and also rules of acquisition of ownership and I would recommend having a
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look at this bill if you haven't done so already it's relatively short and is um quite a kind of clean bill uh it clarifies a number of questions which are uncertain in the law at the moment.
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We just don't have case law so far in Scotland to confirm the status of uh tokens um cryptocurrencies and other forms of digital assets. And in the explanatory notes accompanying the bill, it is stated that it may come to be accepted
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that transferring a certain kind of digital asset will be treated as an effective proxy for transferring the legal right that is stapled to it. So transferring a linked asset if you are transferring a connected token, but the bill itself doesn't say anything
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specifically about the process of tokenization or indeed whether the transfer of a digital asset could transfer something that is linked to it.
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So that is left uncertain in the law. Next slide, please. And so the position at the moment in Scots law is that a token can represent another asset. It can represent a right in the same way that if I were to um
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write an IOU in favor of Alexander saying that I owe him uh £10,000. Um and just to be clear for the record, I do not owe him that money. But if I did, that would be a representation of that
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right he would have against me to receive that payment. Likewise, we could um have a token produced representing that right that he would have against me. So, he would have a contractual right that could be evidenced by that token.
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The question though would be if he wanted to transfer it onto someone else to virtue, could his transfer of the token to virtue also transfer the right to payment against me?
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And under Scots law, as is the case in other legal systems, there are certain types of thing, often negotiable instruments like bills of exchange, promisory notes, where if you follow the rules and you transfer that paper document or an electronic version of it,
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that will also transfer a right to payment or indeed with a bill of leading that represents goods. If you transfer the bill of leading, it will also transfer goods as well.
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The position under Scots at the moment is uncertain as to whether a digital token could do that. We don't have authority on that. I think at the moment it probably would be unlikely that a court would say that the transfer of a
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token would transfer automatically an underlying asset, but we don't know for sure. And as custom usage builds up over time, then maybe that will be accepted by the courts. But for now, we are left with looking at the existing law for
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specific types of linked assets. Next slide please. So what you have to do is look at what the relevant rules are for transfer in relation to each type of linked asset.
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There are considerable problems when it comes to transferring land. So if you have a token and you're specifying that this is representing your ownership of land and you want to transfer that land by transferring the token, that does not
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seem to be possible under Scots law at present. There are specific writing requirements and you also need to have registration in the land register and the transfer of token would just not achieve that. So land at the moment is
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an impossibility for caporeal move. So goods and that would include artwork like the one you can see here. This is a a famous um painting which is often considered to be evocative of Scotland and the Highlands um but I'm sorry to say was not painted
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by a Scottish person but rather an Englishman um in the 19th century but it is uh a painting that can be found in Edinburgh. This is the monarch of the Glenn. So if for example you wanted to tokenize this to allow for a wider um
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diversity of ownership so fractional ownership and to enable ease of transfer of um co-ownership um portions you can seek to do so and the position for movables is a bit more um a bit more um favorable. It's it seems to be possible
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because under the sale of goods act that applies across the UK, ownership of goods in a sale passes when the parties intend for it to pass. This is under section 171 of the sale of goods act 1979.
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And so if I have a token representing this artwork and I want to transfer my share of the artwork to Alexander, uh if I give him the token, if I transfer the token to him, that would seem to suggest that that reflects my
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intention to transfer ownership at that point. So it seems as if the transfer tokens could give effect to the transfer of ownership of artwork or other types of goods. Now there would be problems with this or potential obstacles because
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if the party in possession, the seller in possession despite the tokenization transfers seeks to go ahead and sell to someone in real life, that could defeat the tokenization and that other party could receive ownership. the party that's obtaining
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possession in real life. And that would then mean that anyone who has a token and thinks they have ownership of the asset would actually have an empty token and it would actually not resent an ownership stake. So that is a potential
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problem there. For increal movables, it depends on the specific subtype in question. for claims including rights to payment in Scots law you have to notify the party who owes the money the debtor that there is a transfer and asnation
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and an alternative to that uh newly introduced in the past year is registration in the register of asignations uh a transfer of a token would not do that so unless you can find a way for the transfer of the token to
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meet the requirements of effectively notifying the debtor again you would not transfer the underlying asset the underlying claim. For shares, you need an entry in the register of members, the register of shareholders. And once more, that would be difficult to achieve
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simply by transferring a token. And for intellectual property, it depends on the type. For copyright, it's a bit more straightforward. You need a written asignation, a written transfer document that's signed. Maybe that could be possible, but again, there are
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challenges. And for patents, you need an entry in the patents register. So there are a number of challenges here that are are difficult to overcome and this points us in the direction of reform and I will pass over to virtue at
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this point to continue with the presentation. Alexander if you could move to the next slide that would be much appreciated.
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Thanks very much Alistister and thanks very much Alexander for both invitation and for your very kind uh introduction.
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So um as as we heard from Alistister, the issue with uh tokenization in Scotland is that there are considerable challenges when we try to uh transfer uh the link assaet by using the token and um as Alic mentioned um what may or may
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not possible under the current law depends very much on the type of asset in question uh to be transferred and um it seems that Some other legal systems uh support um transfers of link assets more easily um due to the mechanisms uh
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legal mechanisms they have. uh for example um in English law um the mechanisms of that law especially in equity seem to support uh tokenization of shares uh more than Scott's law and uh this seems to be the case uh with uh
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for the for the tokenization and transfer of uh rights more broadly in English law as well.
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So in in Scotland um if if there is a policy or uh a financial motive uh to facilitate the transfer of assets uh by tokens uh we think that there would need to be a legislative reform uh to enable
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that and uh we also think that the starting point for such reform could be financial instruments uh including shares and that instruments um because the ease of transferability is crucial for those assets uh for them to achieve their intended function and uh for these
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instruments uh legislation uh at UK level uh would would be probably most suitable way and potentially necessary too. But for other types um of property um that we heard from Alistister in detail h further reform at the Scottish
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level um should be also uh considered. Uh next slide please. Thank you. And um as part of our research in this area uh we have considered some comparative developments as well including um in Lienstein and Switzerland uh for inspiration for uh
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shaping potential uh reform for Scotland. uh for the purpose of this presentation we would like to uh briefly mention lienstein uh because it's the first country which enacted a comprehensive regulation of the token economy and uh they enacted
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the act on tokens and trust uh transport technology service providers act in uh 2019 and this act has been enforced from um 1 of January 2020 20. Uh the act includes uh private law provisions uh as well as
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uh provisions concerning um registration and supervision of uh service providers. So uh both private law aspects and some regulatory aspects are covered by the act.
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And um one unique feature of uh Likenstein's approach is that there is no token classification in the act uh like payment token or utility token or security token. So instead uh the act uses uh the so-called token container
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model for all types of tokens. And under this model, uh, a token is a legal object that can, uh, represent other rights of all kinds.
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So this could be in relation to land or shares or bonds or gold. Of course, it might be the case that the asset in question is not linked to other things or legal rights uh, but simply relates to digital court, which is which
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is the case in um, cryptocurrencies like Bitcoin. And in that case uh the container under this um token container model is empty.
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And also the act clarifies that uh in principle uh the disposal of a token results in the disposal of uh represented rights. Of course, if um if the law requires a further step to transfer a represented right and uh
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there is also uh further provisions um dealing with that as well in the in the act. But as a principle uh the disposal of a token results in the disposal of represented right so this is clarified in the um in the act.
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Um next slide please. So just a few concluding points bromas and uh Alistister mentioned the digital assets Scotland bill and we think that uh this bill once enacted will be an important piece of legislation uh for Scotland uh for digital assets more
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broadly in the context of uh property law. But uh concerning tokens, it will also provide greater clarity on the law relating to tokens themselves. But as we try to um address this, cover this um in our presentation, there will be still
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questions even after the enactment of this bill uh that remain about transferring linked assets along with tokens and uh depending on the types of property um in the question, this may not be possible at all or maybe significantly challenging under the
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current um current law in Scotland. So um we think that if uh Scotland would like to pursue an ambitious tokenization agenda, further uh legislative reform uh seems desirable to facilitate and support this reform from the perspective of law on the legal aspects of uh
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tokenization and uh in doing so um other jurisdictions can also offer useful comparative perspectives uh for Scotland uh in shaping its uh future reform to help to address some of the challenges faced uh under school law that we we
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have mentioned today. And uh for the final slide please um if if you like to um um get a bit more detail uh about uh tokenization under Scots law um here's a a link to a blog article that Alistister and I have
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written on the topic. Thanks very much. Thank you. Thank you, Bruss. Thank you, Alistair. And thank you first for your research and your impact for uh legal education and sharing ideas.
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uh I'm I'm your big fan really uh in view my articles I use your sit and approach and I told why it's impossible because Ukrainian law very similar uh in now in in situation uh uh like a Scottish law because we are not a part
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of European Union but use European Union instruments and institute law institutes uh also uh we are in some impact of common law English law like in Scotland.
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So for practical approach uh from my side we are established at a special company in Scotland uh it's called it trusted real world assets and we are going to inspect and support uh tokenization process as a lawyer using
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our uh legal expertise and also we are spend uh our energy and time for a special courses for digital economy and for tokenization as well and also we signed uh memorandum with institute of economical legal research national academy of science of Ukraine
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uh and Robert Gordon University for brief course for Ukrainian businessmans and uh Ukrainian u lawyers just f five days course with international lawyers and Ukrainian academia about regulation in digital economy and uh challenges for real for real business and so I'm very
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welcome for if someone have some ideas join to us and share our own expertise because for my practical approach for my experience is best way for uh research something to work in practic in practice practice and uh sometimes practical questions, very
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simple questions from businessmen for real world. uh sometimes destroy all my academia background and all my legal education because sometimes very uh uh very simple ways and very simple solution give to us more questions more legal question because businessmen as
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Daniel told sometimes people just register it and create some code and tokenize it but from legal part. It's unreal. It's not illegal. Uh for example, 10 years ago, seven years ago in Ukraine, Forbes, Forbes magazine published article about
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first flat was sell by Bitcoin. But when we are open, we know this legal company and this client running around market for few legal company. But we are we are not we don't find solution at that time because state
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registry property registry not a connection with blockchain. So it's it's not a real blockchain uh a smart contract or some something using blockchain. just uh I sell and before someone give me bitcoin or two bitcoin for this flat it just name of uh
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blockchain transaction and not a real blockchain transaction. Same situation now in tokenization and but but using uh last research and uh we know all huge banks and investment company like Black Rockck uh invest a lot of time and be best mind
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for create this tokenized world and our our role of as a lawyers of course create forecast of them and sharing our experience from stock exchange market from uh property law as well and I want to share now a
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presentation from David Christie uh his apologize cannot be now with us but sent to us brilliant presentation I just give me one second to share it to everyone on.
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Oh, issues. Um I think today I would like to however run through a way of thinking about how tokenization can be used in construction contracts to incentivize well overdue cultural change. In doing that I'm going to draw upon ideas of
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gamification which were shared with me by my colleague Lee Bogue. So I've put him as a co-author on this paper but unfortunately we won't be hearing from him today as well. However, thank you to Lee for his input and I draw very
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heavily on some of the information and thoughts he's provided. I've entitled this uh lecture to be catchy dual lingo but for construction cash flow the opportunity of tokenization to finally achieve cultural change in construction.
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Taking a step back when we look at technology I've always thought and this has been something I've kicked around over the years. There are broadly three tiers of uh evolution. The first stage is where technology simply speeds things
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up. It provides uh opportunities for faster, more effective communication and we I think are all aware in our lifetimes of how that has come about. Um in construction contracts in particular uh in the mid 1990s a new form of
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construction dispute resolution, construction adjudication came into being. Uh it was mandated by legislation and it mandated a 28 day turnaround from start to finish. uh I think always think that one of the reasons why that was a successful mechanism is that it
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coincided with the widespread adoption of email. So both a very fast form of communication at least comparatively fast compared to previous methods uh emerged at the same time as a very fast form of dis resolution. uh we will see
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this uh now as well even with video conferencing which has provided another tier of speed to communication but un fundamentally they haven't changed the structure of how legal relationships work. uh the the idea of a tennis match still happens.
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One side has a shot, the other side has a shot. It's just that the the ball passes the net very quickly.
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We then move into stage two and I think we're somewhere around that at the moment which is where the ability to communicate is sped up so far that uh work can be done synchronously. We see that I think with contract negotiations
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where those happen in the cloud. So parties can be amending and changing contracts in real time at the same time while speaking to each other uh as they do so. Uh therefore the idea of how uh contracts are formed changes. The idea
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of how transactions are formed changes and some of the structure changes in terms of construction cash flow. We'll see that that the opportunities of technology change the structure from having to convey uh a series of notices uh and payments happening to being able
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to speed that up and break up the process into smaller fragments because technology facilitates information exchange in a way uh that can be addressed more constructively. As we move beyond that and maybe we're getting to some aspects of that uh we will see
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fewer disputes altogether the ability to hold retain and search for significant amounts of information should mean that there are fewer disputes especially in construction contracts you will see uh every step of the way everything that's done every communication will all be
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both storeable and easily searchable especially with the use of AI that then means that the cause of any disagreements can be identified very quickly and very accurately and so will make it harder to uh have factual disputes because the truth won't be a
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matter of witness recollection any longer but will in fact be something which can be evidence immediately. Uh when I first wrote about this in a newspaper almost a decade ago I said again the truth might be less about
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Holmes and Watson Sherlock Holmes and Dr. Watson but more about phones with apps on a labored pun but one that I still enjoy now.
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How does that impact on the construction industry then? Well, it's been said many times, especially in case law from Lord Denning in the 1970s, that cash flow is a lifeblood of the construction industry. This is more so even just than
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the value of it, but relates to the small margins which construction companies have. They need to have cash flow in order to ensure the ongoing viability of their business. And this was never more apparent than the late 1990s when a series of insolvenies
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really caused many construction projects to go to grind to a halt. What was happening was that parties weren't getting paid. So they were uh becoming insolvent and as a result couldn't pay their own supply chain which meant that
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members of their own supply chain became insolvent. So not only were issues growing to grinding to a halt because of disputes but actually the parties became unable to fulfill their contractual obligations because they became insolvent.
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As a result the UK government commissioned Sir Michael Leam to report and he identified a number of significant problems within the UK construction industry. in particular that it was very adversarial system. The work done was done under tight margins
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and this created a high insolveny risk. The solutions that were adopted result of this report are internationally recognized and have been adopted in many jurisdictions in particular Australia and New Zealand, Singapore, Malaysia and Ireland with I think Ontario possibly uh
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the next on the list. What were those solutions? The key was to set up a system of payment under the housing grants construction regeneration act of 1996 that essentially requires for a series of notices to be uh served
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on the parties. The first of all is uh an application for payment essentially setting out what uh the contractor wants to be paid. Uh there is then a date for payment fixed by reference to that application for payment um and a final
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date for payment. So the payment becomes due legally due uh and a final date for payment is set usually 20 days later.
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Within that period there is provision uh mandated in the legislation that a contract has to provide for various notices. These notices essentially are saying what money will be paid and what money won't be paid. The benefit of this
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is that parties have transparency and clarity about what they'll be paid or won't be paid. And if they have any issues with that, the fasttrack form of dispute resolution, construction adjudication, which I've just mentioned, uh takes effect and should resolve any
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disputes uh promptly or at least very promptly as uh lawyers go in terms of dispute resolution within 28 days. And you'll see here then for those of you who are familiar with coding there is a a form of coding here almost a series of
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networks and gateways that have to be passed through in order for payment to be achieved and this is a legal structure but it is also interesting from a a more technical point of view because you could set up uh and I've
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always advocated for the setting up of smart contracts to control some of those processes. The difficulty is that this legal process has to interact with it.
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So you can't set up a smart contract for payment that doesn't take account of the need for these notices to be served because these notices are mandated by the law. There are various legal issues that might emerge from that. Do these
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contracts constitute construction operations by which they bring in the implied terms of legislation. Um do they is there a question about which law applies? Uh often these contracts happen in cyerspace. So how do you anchor it to reality? I think the answer in that
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situation is that construction contracts um always have a place of performance. So there is always at least one physical location in which the contract is happening and that helps to control that. But there are issues around that to resolve. And there are also questions
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of how these notices get served if there is automatic payment uh and do these notices which were originally set up in order to facilitate payment end up blocking payment and that's something that would have to be resolved. But
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broadly there is the scope then to maintain a process and I think there's an opportunity from this uh legislative solution in terms of smart contracts because it solves some of the problems.
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I won't go into significant detail about the blockchain and smart contracts. I've sort of assumed that everyone in this conference knows but you'll see that obviously the opportunity of smart contracts is security of information uh within cyerspace and also the ability for self-execution
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of contracts so that payment can be made without having to um uh intervene. The benefit here is the change is the onus at the moment uh payment is made at the behest of the employer choosing to make the payment. With a smart contract, you
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could mandate that money is put in an account and it is released uh unless a block is placed on it. So by doing that, you can change it from the discretion of the employer to uh to make payment to an
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ability of the employer to stop payment. That very simple psychological switch I think could have quite a significant benefit uh quite a significant impact on parties relationships. So I think there is a real benefit to it there.
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Um there is obviously debate about whether smart contracts are actual legal contracts themselves are merely automatic forms of payment. That's a question for another day and I think there are other speakers today who are much more wellversed in those issues
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than I am. The benefit of uh the process is that it creates means to solve some of the issues with smart payment contracts and by process I mean the power of the legislative process. Uh by automating the process it can cut back on some of
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the bureaucracy. One of the downsides of the legislative solution in the 1996 act is that it creates a series of paper, you know, a paper trail and that obviously has opportunity costs and other administrative costs associated with it. Smart contracts can cut some of
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that down especially combined with the emerging technology and AI in terms of how information is collected and presented.
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It gives parties security. These processes are mandated by legislation. Therefore, it anchors these payment opportunities in legislation and that means that there is a credibility to what's going on that maybe uh is lacking in some of the other more esoteric forms
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of blockchain and crypto usage. At the end of the day, there will always be a physical asset which can be enforced against. So again, there is another area in which there can be some experimentation with the technology because there's always something uh real
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uh underpinning uh the contract. It isn't simply some financial engineering. And I think importantly the payment process provides solutions to the oracle problem. Garbage in, garbage out.
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Because by defining what goes into these notices, you define uh that what goes into the blockchain smart contract matrix isn't garbage. It is clear information with certain uh defined inputs.
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Uh the problem is that when you have the outputs uh they are well they are high quality because there isn't garbage going into the system.
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So that is a benefit of smart contract payment in general terms. But I think I'd just like to turn the second half of this uh this brief talk to look at how gamification can provide a further step forward in construction contract
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management and improving the culture the culture of adversariality which has been in place since easily before Laam's report in 1994 uh and persists to the present day in some form.
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And to do so, I'd like to start with uh uh reminding you all of Dualingo, the language learning app, which I'm sure many of you have tried at least once. If you think of Dualingo, you'll be familiar with the chirpy little owl, uh
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which is its figurehead, but also of how the game works. I always think it seems to have an array of different tokens that you can gain by partaking of different challenges. you lose tokens and lives for getting things wrong and
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thereby you're both incentivized to do well and also to measure your progress as you go through uh each day. There is also a mechanism by which the series of challenges are imposed. So not only is there a daily buildup of tokens but
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there's a there is incentive to do things over a longer period of time and gradually you can develop new behaviors and new habits around it. So instead of scrolling doomcrolling Instagram for half an hour, you can spend half an hour
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learning uh all sorts of languages and Dualingo. Uh whether that's better or not, it probably is. I think intuitively uh but I'll leave that with you. But certainly it allows you to maybe break some bad habits and replace them with
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better ones. And in terms of uh authority for this lost as my colleague Lee Bogus flag has shown that gamified learning systems significantly increase engagement and time spent learning. So use of tokens can be useful in changing and benefiting
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behavior and that's expanded upon if if people read the book reality is broken by Jonagle. Uh there are various benefits to gamification and I'll come back to the construction impact in a minute.
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Um you'll see here set out in the slide there's a benefit in creating a belief in success. It allows things to be measurable. The esoteric and the abstract stop being esoteric and abstract and are turned into something success in a game that allows parties to
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feel uh people who are playing the game to feel rewarded. uh it allows tasks to be structured and measured and it allows them to get immediate feedback on success and there is research to back that up. There's research to back all of
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this. Let me know if you want to read any further on it. Games as a whole because there's tokens I mean uh build um social fabric we see with Dualingo the ability to share with friends. I'm constantly getting
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reminders from members of my family about it. uh that allows people to build trust and cooperation uh and to collaborate for reward and depending on how the game is structured that can be enhanced or uh the game can be made more
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adversarial. Clearly for construction you'd want to enhance the game and as I said on the slide then games provide clear goals actual tasks and visible progress. So there's something magic in what happens with the tokens generated by games that really help develop
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culture change and it provides feedback loops. So in the same way uh we see with construction contracts the ability to generate tokens uh for uh successful completion of particular tasks. So you could be generating tokens every time you uh serve a notice uh
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every time you do something right under the contract. You could be generating uh tokens which can be fed into the system.
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Financial gain and that could be used to measure a party's compliance with the contract. It could reward good contract uh good conduct and that may be something that actually in time could be um awarded uh a crypto uh benefit as
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well which could be useful in the market and more generally perhaps you can you can buy yourself some leeway further down the road. Uh you could be recognized in tenders as having good conduct. There are a host of options as
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well. So not only do you gamify the position but you provide some uh economic rewards in due course. There's of course a challenge there uh because uh parties could dispute not just the cash flow uh but also tokenization in a
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in a adversarial underlying adversarial culture like in construction. You don't necessarily want to give the parties something else to argue about. Of course, I think the answer to that can be found quite easily in the in the diagram on your slide. You could simply
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have similar analogous processes for tokenization as you do for other forms of payment. That might be a reasonably easy fix. Um this of course brings an administrative burden with it. Uh which means it's not been feasible before but
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with the use of smart contracts and automation more generally you can streamline other processes and I think therefore generate tokens in a more efficient time effective way perhaps with less economic cost and less opportunity cost and thereby uh create
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better culture using tokenization. So an interesting thought there using tokenization to enhance construction culture. Um does it have real world value? Yes, it provides simple incentives and you can link to overall systematic benefits, systemic benefits uh therefore uh generating some
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underlying value for a potential crypto token uh which is tied to good behavior in the construction industry. So, thank you very much. Uh again, sorry I can't be with you, but if anyone wants to get in touch, uh please do so. My uh email
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address will be on the next slide. Good luck with the rest of the conference.
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Cheers. Uh thank you for David. Uh unfortunately he is can cannot be together with us and join to us today but thank you for record and I have just one remark because Dulingo it's Ukrainian program from Ukrainian team. So it's one uh
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example additional evidence why Ukrainians have very huge impact for digital economy in all all world. So uh thank you for join uh just for remind organizers or organizer today thank you for Ukrainian national bar association uh who support our event. Thank you for
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uh professor uh and in state organization institute of economical legal research national academy of science named by academic mammov and thank you Barbara Hendrickson from Canada. Uh thank you professor Madanik uh State University K State K University uh for your speech.
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Thank you Buru and Alistister from University of Abedin and thank you Daniel Wadlarski uh RVA project. Uh and thank you for my very close and great colleague Tanad Mitenco from our organization Ukrainian modern digital science. We are voluntary
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uh working last four years for develop international relation for Ukrainian uh digit digital science and support law enforcement uh international organization with our expertise and uh thank you. So uh if you have some question for tokenization just contact
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with me in my social media uh social network also Ukrainian National Bar Association will publish it a record of this webinar and everyone can ask me about presentation of our our brilliant speaker. we will be very grateful to share to you and if you have some
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ideas for next event. Uh we will uh happy to hold next event and also uh one remark additionally for this conference we will uh share uh maybe next week webinar with Titana Gimma. is uh also apologized today but she prepared
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brilliant presentation about tokenization and insolveny procedure international experience his Ukrainian doctor of law and also my my favorite after uh and researcher on this field um but now in very difficult situation that's why I thank you for Ukrainian
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defender who gave to our Ukrainian colleagues is now possibility. Join to us and be together with us. Uh we'll win together. Thank you. Have a nice day.
Topics:tokenizationdigital economysocial justiceUkrainedigital assetseconomic recoverylegal frameworksfinancial inclusioninternational cooperationdigital transformation
