Networks
There are two networks, the first one covers the legal side of debt, i.e. the relations of banks, and the second one is the network that covers the legal side of property rights through depositories and registers and runs digital assets. DaDepo participates in the second network.
The first network covers the legal side of debt, which means the contractual obligations and rights that arise from borrowing and lending money or other assets. The relations of banks are an example of this network, as banks are financial intermediaries that provide loans to borrowers and collect interest and principal payments from them. The legal side of debt involves the creation, transfer, and enforcement of debt instruments, such as bonds, notes, mortgages, etc., and the regulation and supervision of the debt markets and the debtors and creditors https://academic.oup.com/rfs/article/36/5/1970/6696722.
The second network covers the legal side of property rights, which means the legal entitlements and duties that relate to the ownership, use, and transfer of tangible or intangible assets. Depositories and registers are examples of this network, as they are entities or systems that hold and record the securities or other financial instruments that represent the property rights of the owners or holders. The legal side of property rights involves the creation, transfer, and enforcement of property instruments, such as shares, deeds, patents, etc., and the regulation and supervision of the property markets and the owners and holders https://www.scconline.com/blog/post/2022/03/28/evolving-jurisprudence-in-connection-with-sarfaesi-vis-a-vis-pending-statutory-dues/.
The second network also runs digital assets, which means the assets that exist in a digital or electronic form, such as cryptocurrencies, tokens, smart contracts, etc. Digital assets are a subset of property rights, as they are based on the ownership, use, and transfer of digital or electronic data. However, digital assets also have some unique features and challenges, such as the use of cryptography, blockchain, and distributed ledger technologies, the lack of clear legal definitions and frameworks, and the cross-border and cross-jurisdictional nature of the digital asset markets https://corporatefinanceinstitute.com/resources/commercial-lending/subordination-agreement/.
DaDepo – plan
Shortcomings:
Most of the world’s assets are not currently tradable. Depositories deal only with securities. Digital assets are mostly not tradable due to the inability of depositories to handle them. The problem is that depositories are limited to too few different instruments. Exchanges and other trading places cannot reach the client because there is no bank-depot-exchange link that can be trusted and accepted by the bank.
Difference:
The most important difference is that we allow civil law contracts into the depository, which frees up the capital of entrepreneurs. We treat civil law contracts as property rights that are separate rights from their internal relations. This approach allows the owner of these rights to receive an additional benefit and release their locked-up capital.
Out of the woods:
We have launched the Digital Assets Depository (DaDepo) project. (https://dadepo.com/) Our job is to offer customers such a service where they can register their wide range of instruments and digital assets (for example: NPL, DLT, FC) in the depository. Clients are banks, stock exchanges, and economic agents who act as account managers.
Legal basis
India: https://ifsca.gov.in/Pages/Contents/ApplicationProcess
Malaysia: https://www.sc.com.my/regulation/licensing
EU: AIMFD https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/financial-markets/investment-funds_en Ireland: https://www.centralbank.ie/regulation/central-securities-depository-regulation-(csdr)
DaDepo project
Introduction
Where does the contract come from and where does the depository come from:
Contracts
Some of the first written contracts are the Sumerian stone tablets. Contracts are legal agreements that specify the rights and obligations of the parties involved in a transaction, such as a sale, a lease, a loan, or a service. Contracts are one of the oldest forms of written communication, and the Sumerians were among the first civilizations to use writing to record their contracts https://www.bbc.com/news/business-39870485
The Sumerian stone tablets contain various types of contracts, such as:
• Sale contracts: These are contracts that document the transfer of ownership of goods or property from one party to another, in exchange for a certain price or value. For example, one tablet from the city of Ur records the sale of a house and a garden for 600 shekels of silver https://www.atlasobscura.com/articles/cuneiform-tablet-marriage-contract-infertility-surrogate-mother-assyrian
• Lease contracts: These are contracts that document the temporary use of goods or property by one party from another, in exchange for a certain rent or fee. For example, one tablet from the city of Nippur records the lease of a field for three years for 180 shekels of barley per year https://www.archaeology.org/issues/291-1803/trenches/6363-trenches-kanesh-mesopotamian-trade-networks
• Loan contracts: These are contracts that document the lending of money or goods by one party to another, in exchange for a certain interest or repayment. For example, one tablet from the city of Uruk records the loan of 10 shekels of silver for one year at 20% interest https://sites.middlebury.edu/middartmuseum/2021/07/06/neo-sumerian-record-keeping-a-cuneiform-tablet-fragment-from-a-mesopotamian-archive/
• Service contracts: These are contracts that document the provision of labor or skills by one party to another, in exchange for a certain wage or reward. For example, one tablet from the city of Lagash records the service of a carpenter who built a door for a temple for 10 shekels of silver https://rethinkq.adp.com/cuneiform-tablets-secrets-mesopotamian-payroll/
DaDepo – Derived from CSD
A central securities depository (CSD) is an entity responsible for the centralized holding, settlement, and management of securities such as stocks, bonds, and other financial instruments in electronic or dematerialized form. Traditionally, CSDs primarily focus on securities custody, clearing, and settlement processes within financial markets.
However, if a CSD were expanded to include the registration of claims arising from civil contracts, it would involve an extension of its services beyond traditional securities to encompass the digitization and management of broader asset classes, including contractual rights and claims.
Here’s how such a specialized CSD handling civil contract claims might function:
- Extension of Services: The CSD would expand its scope to allow for the registration and management of rights arising from civil contracts alongside traditional securities. This expansion would involve accommodating the digital representation and management of contractual claims within its infrastructure.
- Digital Contract Registration: The CSD would facilitate the digital registration of civil contracts and associated claims. Smart contract technology or similar solutions might be utilized to encode and automate the execution of contract terms and claim rights.
- Integration with Securities Infrastructure: While extending its services, the CSD would need to integrate these newly registered civil contract claims within its existing securities infrastructure. This integration could involve adapting systems to manage multiple types of assets and ensuring interoperability within the platform.
- Regulatory Compliance: The CSD would need to comply with additional regulatory requirements related to the registration and management of civil contract claims. This includes adherence to legal frameworks governing contract rights, obligations, and dispute resolution.
- Security and Transparency: Ensuring the security, transparency, and immutability of the registered civil contract claims, similar to how traditional securities are managed within the CSD. Utilizing blockchain or distributed ledger technology could maintain the integrity of these digital assets.
- Facilitation of Transactions: The CSD could potentially enable the transfer or assignment of registered civil contract claims between parties, subject to the terms and conditions encoded in smart contracts or registered agreements.
- Dispute Resolution Mechanisms: Incorporating mechanisms for resolving disputes related to civil contract claims, potentially leveraging smart contracts or digital arbitration systems.
By expanding its services to include the registration and management of claims arising from civil contracts, a CSD would transform into a comprehensive digital asset infrastructure supporting both traditional securities and digitally represented contractual claims. This extension could provide a centralized and secure platform for managing diverse types of assets while maintaining the integrity and efficiency of financial market operations.