By Ashwaq Shukralla
Chief Legal Officer
When businesses approach us at ATME, they often arrive with a straightforward objective of raising capital. But what they often don’t know is how to structure their assets in a way that makes them compliant with regulations and attractive to investors.
And attractive to investors doesn’t just mean offering high returns or showing financial growth on paper. It’s about knowing what they are buying into. Product structuring transforms an investment idea into a proposition that investors can understand, assess, and act on. With sound legal support, the product clearly defines what investors own and outlines the rights attached to that ownership, such as dividends, redemption or priority claims.
A properly structured token issued under a regulatory framework gives investors access to the relevant disclosures and provides a foundation from which to pursue legal remedies. The investment terms are set out in formally binding agreements that guide the behavior of issuers, allocate risks, and clarify what happens in the event of a default or dispute. Such frameworks also establish how tokens can be traded or transferred, what laws apply, and how income is taxed. In doing so, it gives investors the informed confidence they need to evaluate and participate in an investment opportunity.
Providing these essential safeguards begins with how the token is structured. Let’s explore what actually makes a token offering sound, compliant, and investable.
What Makes a Sound Token Structure?
Every tokenized asset must answer these fundamental questions: what exactly does this token represent? Is it a share of equity in the business? A promise to repay with interest (i.e., debt)? A revenue-sharing instrument? Or something else entirely?
This classification defines how the token will be treated under applicable laws and regulations, and what rights and risks investors are taking on. While the responsibility for structuring the product sits with our dedicated Product Structuring team, as legal professionals, we work with them to ensure that each decision made during this process is underpinned by a defensible and compliant legal foundation. This collaboration ascertains that:
- The token structure is compatible with applicable laws.
- Investor rights (such as entitlement to returns, or claims on underlying assets) are clearly and legally defined.
- Issuer obligations are reasonable and realistic to prevent defaults or operational strain.
Turning Structure into Legal Certainty
Once the structure is defined, we move to formalize the terms governing the tokenization project. While these may take on different forms, the legal documents governing the token issuance and investment would address matters such as:
- The purpose and structure of the token
- The role of the token issuer
- The tokenomics (distribution, pricing, payout logic, and limitations)
- The rights and obligations of investors
- Key risks, legal disclaimers, and compliance statements
- Subscription terms
- Terms governing exiting the token investments
- Terms governing token maturity
- Dispute management
One such example is the adaptation of a Whitepaper. In all cases, drafting with meticulous legal rigor is essential, as inconsistency between what is promised in a Whitepaper and what is enforceable in the law can potentially lead to disputes, regulatory penalties, and reputational loss.
A Case in Point: Tokenizing the Aspen St. Regis Resort
A clear example of how structuring directly influences the outcome of a token offering is in the case of the Aspen St. Regis Resort. In 2018, Elevated Returns initiated a project to tokenize ownership in the Aspen St. Regis Resort, a luxury hotel in Colorado. They created Aspen Digital Inc., a single-asset trust, and issued digital tokens representing shares in this entity. Each token was valued at $1, collectively representing an 18.9% ownership stake in the resort. This initiative was among the first major digital tokenizations of a commercial real estate asset.
While the project eventually succeeded in raising the planned capital, it took detailed financial and legal consideration to structure the product. Initially, there were plans to list the tokenized asset as a Real Estate Investment Trust (REIT), but these plans did not materialize. Subsequently, Elevated Returns pivoted to securities regulations and structured the token as digital securities offered to accredited investors. They partnered with Securitize to facilitate the token issuance and aimed to digitize their entire portfolio of real estate assets using blockchain technology.
This case illustrates how even promising and well-capitalized projects require careful legal designing to take the project from an idea to the market.
Enabling Trust, Scale, and Sustainability
A robust legal foundation ensures offerings can survive legal scrutiny. It requires close coordination of the legal function with their product structuring, compliance, and risk management counterparts to deliver token offerings that are market-ready and protect the interests of both issuers and investors. This integrated approach is what allows us at ATME to:
- Navigate regulatory complexities and adapt to evolving standards
- Establish investment terms that are clearly written and commercially balanced
- Build investor protections within binding agreements and smart contract logic
- Clarify issuer obligations so businesses can manage expectations and avoid legal friction down the line
These protections transcend theory to become practical mechanisms that determine how ownership is defined, what regulatory framework is applicable, what the contractual obligations of an issuer are, how investors’ rights are enforced, and disputes are resolved. These questions determine the level of trust investors place in a token offering.
Tokenization holds tremendous potential to reshape capital markets, but only if its legal fundamentals are addressed. Clarity of rights, enforceability of commitments, and alignment of structure with regulations and laws are what turn potential into performance. And at ATME, our legal approach is built to make that performance possible.