The digital tokenization of property rights. A comparative perspective

Blockchain technology allows virtual disintermediation and automatization of property transactions, which might help to design future platforms, intended to facilitate cross-border transactions within the EU and worldwide. To this end, users of these blockchain-based platforms may create the so-called “digital tokens” or “colored coins” that aim to represent rights over different types of “real world” assets. By transferring a digital token, the parties aim to transfer the ownership or other property rights over the asset represented by the token without the intervention of traditional intermediaries, such as real estate conveyancers, land registrars or notaries specializing in real estate. However, this new technological tool raises several questions in the field of private law, such as the legal nature of the token, how the effective transfer of the property rights operates or how ownership rules may be applied in this decentralized environment (e.g. rights and duties of the token holder). Some of the issues at stake have only been tentatively addressed by both lawmakers and academia. In light of this research gap, this paper addresses these controversial issues from both a private law and a comparative perspective, and proposes a model to tokenize the right of usufruct over chattels and real estate, analyzing its legal viability and limitations across six jurisdictions. The paper concludes that private law rules may be adapted to the tokenization of property rights, which may contribute to the establishment of a digital market for the trading of asset-backed tokens worldwide.