A digital financial instrument is a financial asset or contract represented and managed using distributed ledger technology or other digital means. These instruments can represent traditional assets like stocks or bonds, or native digital assets such as cryptocurrencies and tokens. They enable automated execution and transparent record-keeping. Their digital nature allows for novel forms of ownership and transfer.
Context
The classification and regulation of digital financial instruments pose significant challenges for global financial authorities. There is ongoing discussion regarding how existing securities laws apply to various digital assets. Innovations in this area aim to create more efficient and accessible financial markets, attracting both retail and institutional investors.
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