Alternative digital assets

An alternative digital asset is a digital asset that represents an interest in physical commodities or assets (non-financial assets)- that is, in alternative assets that exist in the digital domain, and are maintained and stored in a digital format.

Main examples

By specific nature, cryptocurrencies are alternative digital assets. They consist of high-risk coins and tokens that are issued and traded using blockchain technology, which can be accessed on digital platforms and by digital means 24/7. A prime example is bitcoin which is traded on major cryptocurrency exchanges.

Furthermore, alternative digital assets include tokenized alternative assets which are digital twin tokens representing an interest in, entitlement to, or claim on, an alternative (or non-security) asset (or claim on the issuing entity for the asset, where applicable), where such representation itself satisfies the definition of such interest, entitlement, or claim under applicable laws. If certain activities are performed on a tokenized non-financial asset, the classification category may change. For example, in the case of tokenized real estate, division into smaller units may convert the alternative digital asset to a financial digital asset.

These alternative digital assets may include tokenized physical commodities (e.g., wheat, oil, corn, sugar), tokenized real estate, or other tokenized assets of goods (e.g., carbon credits, art, intellectual property rights, and intangible, discrete assets that only exist in a digital form on a distributed ledger platform).

Other examples of alternative digital assets are tokens sold to supporters of a sport team (i.e., fan tokens) which are uniquely identifiable digital assets branded in an issuing club’s colors. In addition to their status as digital merchandise, the tokens also have an added value. This value is reflected in certain privileges granted to the token owner such as access to exclusive owner’s merchandise, special VIP events, and voting rights on certain club matters ranging from defining the messages that should be emblazoned on club scarves, to the designs of new kits and naming rights to training facilities. This type of alternative digital assets creates a new level of interaction with sports fans, who are among the most invested stakeholders globally in any organization or industry.