Should All Blockchain-Based Digital Assets be Classified Under the Same Asset Class?

Abstract

The literature is well aware that blockchain-based digital assets would constitute a new asset class. However, it has been rather silent about the distinction among them. This paper discusses the digital tokens' differences and similarities by their (i) creation and initial distribution; (ii) intended properties; (iii) actual usage; and (iv) behaviors. Although the digital tokens are indistinguishable in some aspects, they differ in the way they are created and initially distributed. Some of them have distinguishable risk and return profiles. Therefore, we take a view that the digital tokens take (or will take) different roles in the financial systems; should be classified under different asset classes; and should be subject to different sets of regulations (although some may overlap).

Knowledge development in non-fungible tokens (NFT): a scoping review

“…As an innovative and disruptive tool, NFTs need proper management to act as a source for competitive advantage. Since digital tokens play different roles in the financial system, they should be regulated differently (although some may overlap) and maybe by different authorities (Nakavachara et al, 2019). Tokens that have properties similar to "security" should be governed by regulations and regulators related to security (Nakavachara et al, 2019).…”

“…Since digital tokens play different roles in the financial system, they should be regulated differently (although some may overlap) and maybe by different authorities (Nakavachara et al, 2019). Tokens that have properties similar to "security" should be governed by regulations and regulators related to security (Nakavachara et al, 2019). The digital tokens with properties reminiscent of "money" should be governed by money-related regulations/regulators, and digital tokens that possess both "money" and "security" properties should be governed by both sets of regulators/regulators and, alternatively, policymakers could be established for all types of digital tokens.…”

“…The digital tokens with properties reminiscent of "money" should be governed by money-related regulations/regulators, and digital tokens that possess both "money" and "security" properties should be governed by both sets of regulators/regulators and, alternatively, policymakers could be established for all types of digital tokens. The policymakers should be aware of the differences among the types of digital tokens and regulate each appropriately (Karandikar et al, 2021;Nakavachara et al, 2019;Paul, 2019).…”

Are stable cryptocurrencies exempted from impossible trinity?

“…Moreover, holders of Stablecoins enjoy the combined advantages of using a blockchain-based digital infrastructure in fulfilling the functions of store of value and media of exchange and of using a traditional currency, which merely plays the role of the unit of account (and in some circumstances the trusted reserve to which is convertible to). In the literature, there are similar works that explore the monetary aspects of cryptocurrencies in general (Nakavachara et al, 2019) and their price stabilization mechanisms in particular (Mita et al, 2019;Calcaterra et al, 2019). The latter extracts useful general concepts by reviewing and comparing 24 Stablecoin projects.…”

Essays in alternative money, banking, finance

“…Corresponding to this, Stablecoins were developed aiming to address the issue of excessive price variation in cryptocurrencies like Bitcoin (Caginalp, 2018). In the literature there are similar works which explore the monetary aspects of cryptocurrencies in general (Moin et al, 2019;Nakavachara et al, 2019) and their price stabilization mechanisms in particular (Mita et al, 2019;Calcaterra et al, 2019;Pernice et al, 2019). The latter extracts useful general concepts by reviewing and comparing 24 Stablecoin projects.…”