Token sales are one of the most innovative methods of raising funds. In token sales blockchain-based tokens are issued to investors in exchange for national currencies or other tokens. Depending on their form, tokens can also represent regulated financial instruments. Especially with what are known as security token offerings (STOs), traditional securities are actually issued in the form of tokens. But (supposed) utility tokens can also qualify as regulated instruments, meaning, in particular, that prospectus obligations must be observed. The question of whether a prospectus needs to be prepared and, if so, in what form, depends not only on the token, but also on the audience targeted by the offer of sale. In some cases there may also be authorisation requirements under regulatory and merger control law. If the issue is properly designed, the regulatory requirements can be reduced or downgraded.
Gleiss Lutz provides guidance on all aspects of token sales, starting with the design of the token right through to organising the issue and dealing with the matter of the taxation of the proceeds. We advise on prospectus and/or authorisation obligations and on the avoidance of said obligations and take care of getting the project cleared by the Federal Financial Supervisory Authority (BaFin). We also assist issuers when it comes to complying with the registration requirements under corporate law as regards the tokenisation of shares and the antitrust and merger control requirements and provide guidance on the development of innovative design options in this area, whilst never losing sight of all the data protection, IP and IT implications of token sales and the tax implications of the proceeds from the issue.