Debt securities are financial instruments that represent money borrowed by an issuer from an investor, obligating the issuer to repay the principal with interest. These instruments include bonds, notes, and debentures, which are contracts where the borrower promises to pay back the loan amount plus interest over a defined period. They represent a loan made by an investor to a borrower, typically a government or corporation. Unlike equity, debt securities do not grant ownership in the issuing entity.
Context
In the context of digital assets, discussions around debt securities often relate to the collateralization of stablecoins or the potential for tokenized debt instruments on blockchain networks. Regulatory bodies are actively examining how existing securities laws apply to such digital representations. This intersection highlights a significant area of development and legal debate within financial sector technology.
Tokenization of SOFR-linked debt on a DLT network enables near-instantaneous, compliant settlement, drastically reducing counterparty risk and capital lockup.
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