🏢Legal and Regulatory Overview
Introduction
xStocks are tokenized tracker certificates issued as freely transferable, on-chain securities. Each xStock tracks the value of a publicly listed equity or ETF on a 1:1 basis, and is fully collateralized by that underlying asset.
xStocks are issued by Backed Assets (JE) Limited, a Jersey-based issuer that is fully owned by Backed Finance AG, a Swiss-based tokenization provider. The issuer complies by Jersey regulation and operates under an EU-compliant prospectus approved by the FMA in Liechtenstein. The legal documentation for each product—including the prospectus, terms and conditions, and final terms—is available at: https://assets.backed.fi/legal-documentation
Legal Classification of the Products
xStocks are classified as tracker certificates, a form of structured product. From a legal standpoint:
Each xStock is a bearer debt instrument issued by Backed Assets (JE) Limited.
The financial value of the token is derived from the price of a specific underlying equity or ETF.
Token ownership does not grant any voting or shareholder rights in the underlying asset.
Regulatory Authorizations and Compliance
To support its issuance and distribution model, Backed has obtained the following regulatory authorizations:
In Jersey: Backed Assets (JE) Limited is registered with the Jersey Financial Services Commission (JFSC) and holds the required COBO and CGPO consents to issue security tokens.
In the EU/EEA: Backed has filed a prospectus with the Liechtenstein Financial Market Authority (FMA). This prospectus has been approved under the EU Prospectus Regulation, enabling licensed third-party distributors to offer xStocks to retail clients across the EU/EEA.
Although xStocks are issued as securities under the regulatory frameworks of Jersey and the European Union, other jurisdictions may classify them differently, including as crypto assets, and may have different licensing requirements for their distribution. Each distributor is responsible for conducting its own regulatory assessment based on the laws of the jurisdiction in which it operates and the locations of its end users.
Collateralization and Safeguarding of Assets
Every xStock is fully collateralized by the corresponding underlying asset (publicly traded equity or ETF) held in secure, segregated accounts.
Collateral is held with regulated custodian banks or brokers in Switzerland and the United States.
Each product has its own dedicated sub-account to ensure asset segregation.
Collateralization is governed by a three-party Account Control Agreement involving:
The Issuer – Backed Assets (JE) Limited
The Custodian Banks or brokers
An Independent Security Agent
The Security Agent:
Has full viewing rights over the collateral accounts
May take control of the accounts if it determines that token holders’ rights (as defined in the approved prospectus) are not being upheld
Product Ownership and Blockchain Registration
Ownership of xStocks is established and secured through a DLT-based registration system. Specifically:
Token ownership is recorded on public blockchains (currently Solana and EVM-compatible chains)
Ownership rights are legally recognized under the Swiss DLT Act, which establishes that DLT-based records are valid evidence of title to financial instruments
This framework provides holders with a blockchain-native yet legally compliant representation of ownership rights.
Bankruptcy Protection and Legal Structure
The structure of the Backed group is designed to insulate token holders from broader corporate risk. The key features include:
Backed Finance AG is the Swiss parent entity that handles operations and employs most personnel.
Backed Assets (JE) Limited is an SPV, a fully owned subsidiary of Backed Finance AG. Dedicated solely to the issuance and redemption of xStocks. It maintains its own bank and collateral accounts and conducts AML onboarding in accordance with Jersey law.
All product-related assets are held in separate, product-specific collateral accounts. Operational funds are managed in distinct accounts. No commingling of funds occurs.
In the event of issuer default:
The Security Agent will assume control of the collateral accounts
The underlying assets will be liquidated
Proceeds will be distributed to token holders in accordance with the terms defined in the prospectus and product documentation
Non-US Solicitation
xStocks are not marketed, offered, or solicited in the United States or in any other jurisdiction where such activity is prohibited. Backed collaborates exclusively with partners who agree to comply with all applicable restrictions as set forth in Backed’s legal documentation, including the prohibition on offering or selling xStocks to U.S. persons or within the United States. Collaborators are required to implement all necessary measures to ensure compliance with these restrictions.
For more information please visit https://assets.backed.fi/legal-documentation or contact us. https://xstocks.com https://backed.fi
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