It is our opinion that bCSPX operates within appropriate regulatory boundaries, and we aim to provide additional insights into what this means for potential AAVE integration. As a tokenized equity instrument, bCSPX is structured to adhere rigorously to Jersey Laws in terms of issuance and to comply with MiFID II provisions with respect to its offerings.
The limitation of token sales to users within the EU/EEA effectively ensures that operations remain confined to territories within the issuer’s approved scope. Crucially, Backed does not sell its tokens to U.S. persons or on behalf of U.S. persons, and tokens are neither marketed, offered, nor solicited in the United States or any other jurisdiction where such activities are prohibited. Consequently, the potential for overlapping jurisdictional claims—especially in light of concerns regarding U.S. regulatory reach—is robustly mitigated.
The design of Backed Tokens permits issuance and redemption by Professional and Qualified Investors while also allowing retail users to redeem tokens provided they successfully complete mandatory AML/KYC checks with the issuer. This structure facilitates DeFi composability and token integration, enabling Backed Tokens to circulate among various pools on distinct decentralized protocols without being necessarily classified as securities trading venues. By extending the hold and redemption functionality to retail users, the requirement that both sides of the transaction be accredited investors is effectively relaxed.
In a separate context, AAVE possesses compelling arguments to claim exemption under Recital 22 of MiCA, which states that “where crypto-asset services are provided in a fully decentralized manner without any intermediary, they should not fall within the scope of this Regulation.” The protocol’s design, along with its technical and governance frameworks, is sufficiently decentralized to exempt it from the authorization obligations imposed by MiCA potentially. Moreover, given the decentralized nature of the protocol and the absence of legal personality, pursuing authorization under CASP (as defined in MiCA) or as an Investment Firm or Trading Venue under MiFID appears unwarranted. At this stage of regulatory evolution, no established laws or procedures would enable a decentralized protocol to obtain the relevant authorizations.
Based on the foregoing observations, we do not identify bCSPX listing as entailing increased regulatory risks.