CRYPTO CURRENCIES & INITIAL COIN OFFERINGS LEGAL STATUS QUO
• #1: legal character – definition • #2: legal protection for players • #3: interdisciplinary research • #4: regulatory model • #5: legal qualification of coins and token • #6: ICOs / regulatory framework
• are cryptocurrencies currencies? • functional approach • source-related approach • structural characteristics • private origin
• NO MONEY, NO E-MONEY, NO OFFICIAL MEANS OF PAYMENT • no governmental emission • produced by “mining“ • production process • digital asset – digital product
• Definition ECJ: “ vir irtual l currency Bitcoin has no purpose other than to be a means of payment ” and “is accepted by specific economic operators” • not useful – misleading
“a dig igital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fia iat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically” + private origin, tradeability - concept as a means of payment not appropriate
• “virtual currencies' means a digital representation of value that is neither issued by a central bank or a public authority, nor attached to a le legally established currency, which does not possess the le legal status of currency or money, but is accepted by natural or legal persons as a means of exchange or for other purposes , and can be transferred, stored or traded electronically” ++ no currency in a legal sense, no money, no means of payment means of exchange
• private asset – private autonomy • EU-wide protection by the fundamental l rig ight to property • restrictions must be appropriate, proportionate and the most moderate means • protection of legitimate expectation (high investments)!
• character of goods fulfilled (no currency or money, but means of exchange) • free movement of goods • only restrictions if there are «mandatory requirements» e.g., potential restrictions of freedom of capital (e.g., Cyprus ‘12, Greece ‘15) not applicable
• research platform • interdisciplinary research (law, IT, finance, companies) • identification of legal framework • development of new regulatory approach • bottom-up-approach / best practices
Expert rts support rt the s smartblo lockchain in in init itia iativ ive Bundle led Expert rtis ise in in: Smart Law Smart Tax These renowned people contributed to the agenda: Smart Technology Smart Finance SmartBlockchain.at 14/11/2017 11
SmartBlockchain.at 14/11/2017 12
• methods • interdisciplinary collaboration among key players • creative potential due to lack of bureaucratic burdens • scientific focus guarantees objectivity and independence • targets • specific concepts • smart regulation
• smart regulation! • smart, modest and only the necessary minimum • boost of innovation potential • important contribution of Austria for the EU Council Presidency 2018
Rights associated? No Yes (Coin) (Token) Voucher Security
• small issuings (max 1.5m Euro): subordinated loans • insolvency of issuers – high risk investment • public offerings – obligation to publish a prospectus • prospectus approval
• new form of enterprise and project financing • offering of new coin or token for sale or exchange for other coins • collected funds are used for company’s own business • participation motivated by expectation of price increase
• 3 models • Issuing of coin – ecosystem model (no rights) Consumer Rights Directive (information obligations) • Issuing of token – voucher model same requirements • Issuing of token – security model Prospectus Directive (information obligations)
• current situation: subordinated loans – little protection of investors - heavy losses in an insolvency situation • ICO: (arguably) fairer solution for all parties - value of coins may remain even if issuer is insolvent - coin remains even if company ceases to exist a new way of funding?
Too complicated? www.ico-you-can.com Provides first legal classification (Austrian law)
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