Issuer and Structure Diligence

Regulatory status and the regulator; balance sheet and audited financials; track record; the identity and independence of the custodian holding the underlying; the administrator and auditor of any fund structure. Issuers are sized as credit exposures, and concentration is managed across every instrument they issue.

Whether the token is a direct interest in a fund, a note issued by a special purpose vehicle, or a contractual claim on the issuer. Whether the underlying assets are bankruptcy-remote from the issuer, and in which jurisdiction that has been tested. What the offering documents say about the holder’s rights, and whether the token contract can override them.

What assets back the token, how often their holdings are published, and who attests to them. Whether redemption is against the issuer at net asset value, on what schedule, with what gates, and in what currency. Whether a secondary market exists and how deep it is. The difference between a daily-redeemable Treasury fund and a quarterly-gated credit fund is the difference between cash-like and illiquid.

Audit history of the token contract; upgradeability and who controls it; freeze, seize and blacklist functions and their governance; whitelist administration; the chains the token is deployed on and how it moves between them. A contract that lets the issuer freeze or reassign balances is a feature for compliance and a risk for the holder, and is documented as both.