Regulation of Crypto Tokens and Initial Coin Offerings in the EU
European Journal of Comparative Law and Governance 6 (2019) 146-186
41 Pages Posted: 21 Jun 2019 Last revised: 1 Jul 2019
Date Written: May 30, 2019
Much like initial public offerings produce publicly traded securities, Initial Coin Offerings (icos) produce crypto tokens tradeable on crypto exchanges. Despite an apparent need for investor protection the ico and the tokenisation phenomenon have yet to be addressed by legislative action on the EU level. The paper studies the suitability of the EU regulatory framework to capture tokenised financial instruments and utility tokens based on the views of the EU supervisory and national competent authorities. It is argued that EU regulators shall first ensure legal certainty by defining the scope of to-kenised financial instruments subject to MiFID. Further, authorisation and ongoing requirements shall be adapted to address the risks posed by distributed technology and direct global access of investors to crypto markets. Finally, there is no immediate need for a bespoke EU-wide regime governing utility tokens; fragmentation of the market is a positive development providing a testing field for future supranational initiatives.
Keywords: EU financial market regulation, crowdfunding, cryptoregulation, ICOs, EU law and governance, MiFID
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