There are still a lot of legal unknowns in this ecosystem, because there are new protocols being coded every day and also because existing protocols are being routinely upgraded. The range of testing environments provided ahead of deployment are mainly used by developers and a few tech-savvy project supporters, not by ordinary users nor regulators.

In the Polkadot ecosystem, the same asset can take on various forms because of concepts such as:

• canary networks

• system chains

• remark tokens

• cross-chain transfers

• liquid crowdloans

• staking derivatives

Depending on jurisdictions, this modularity can introduce more complexity in regulatory risk management by the holders of parachain tokens.

The W3F has outlined the process through which DOT's status evolved from Security to Software.

In the end, compliance remains the biggest challenge for users, investors, project teams, and VC institutions alike.

In this section, we cross-reference Polkadot network's technologies with existing legislations and review some essential ecosystem tools for assets management.