A regulatory approach where the responsibility for determining the appropriateness of a digital asset for investors rests with the issuing firm.
A token suitability model is a regulatory framework where companies offering or dealing with digital tokens are primarily responsible for assessing whether those tokens are appropriate for their intended investors. This contrasts with models where the regulator may pre-approve or vet specific digital assets. Under such a model, firms must conduct due diligence to understand the risks associated with a token and ensure it aligns with the risk profile and objectives of the investors they serve.