Special Purpose Vehicle (SPV)
A legally separate entity created solely to hold specific assets, insulating them from the parent company's balance sheet and insolvency risk.
A Special Purpose Vehicle (SPV) is a legal entity — typically a company or trust — created for a single, narrow purpose: to hold specified assets and issue securities representing claims on those assets. The SPV has no employees, no other business activities, and is designed to be 'bankruptcy remote' — meaning if the parent company that created it becomes insolvent, the SPV's assets cannot be seized by the parent's creditors.
In tokenised asset structures, the SPV sits between the custodian (which holds the actual securities) and the token holders (who hold ERC-20 tokens). The SPV is the registered legal owner of the underlying assets; token holders have a contractual claim against the SPV. This structure means that even if the token issuer (the company that created the SPV) becomes insolvent, the underlying assets in the SPV should remain protected and available for redemption by token holders.
SPVs are the dominant legal wrapper for tokenised stocks, ETFs, and real-world assets. Their effectiveness depends on clean legal separation under the applicable jurisdiction's insolvency law, proper documentation, and independent governance. The protection they provide is theoretical until tested in an actual insolvency — which has not yet occurred for a major tokenised asset SPV.