04 Oct Regulation of ICOs: Europe moves forward
This post is also available in: Español (Spanish)
In the past few months, various European countries have been taking steps towards the regulation of tokenized assets and ICOs. Spain is one of the countries pronouncing itself, as we can see in the recent statement of the CNMV (the Spanish financial regulator).
Spain and security tokens
The Spanish National Securities Market Commission (CNMV) has issued a statement regarding the regulation of ICOs on September 20th, 2018. The Spanish financial authority considers most tokens issued through ICOs as negotiable values: the token attributes rights of or expectations of (potential) participation in the revaluation of profitability and that, in the case the token gives rights to access services or assets, such tokens are offered with the expectation of a benefit as a result of their revaluation.
In this recent published statement, CNMV highlights the minimum intervention of the entity authorized to provide investment services for marketing purposes. Therefore, it will not be necessary the intervention of an authorized entity to perform the placement of the securities or to carry out the custody of the securities.
However, the negotiation of tokens in regulated Spanish markets does not seem possible since tokens should be represented by means of book entries; nor does it seem possible to generate an internal market in an unregulated platform or that the tokens are traded in an exchange located in Spain, since these platforms should have the required authorizations to carry out their activity.
According to its volume and to whom the ICO may be directed, it will be regulated as a public offer or as an investment service. An ICO will not be understood as a public offering as long as it is directed exclusively to qualified investors, to less than 150 retail investors or to investors that invest a minimum of €100,000.
Even though it emphasizes that there is still a long way to go, it represents another step in the regulation of ICOs in Spain, renewing the statement issued last February. Other European countries are also developing their regulation.
France is moving forward
In the case of France, it is the first legislative body in the world that will approve a law on ICOs, the AMF (French Financial Markets Regulator) will have the task of analysing the white papers of each ICO and will provide the latter with a license or visa in the case of being in agreement with what is established in it. The list of ICOs that have passed the filter of the AMF will be published in a whitelist that may be consulted by investors.
Although obtaining the visa is voluntary for the companies, it is highly recommendable, since this bill provides that banks must establish equitable and proportionate measures for opening bank accounts to those entities that have such a visa.
In addition, France has taken another giant step to increase investment in cryptocurrencies. Following the aforementioned law, institutional investors, who were previously prohibited from investing in ICOs, will be able to invest around 10% -20% of their portfolio in tokens of the ICOs that have acquired the license.
Europe & Legal frameworks for ICOs
Another of the European countries that has advanced most in the construction of the legal framework of the ICOs is Switzerland, where last February the FINMA (Swiss Financial Market Supervisory Authority) focused on the economic function and the purpose of the tokens, as well as avoiding money laundering through ICO. For this purpose, FINMA has made an effort to categorize ICOs in its guide, differentiating them in 3: Payment ICOs, Utility ICOs and Asset ICOs.
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