As a public offer or as a private placement?


Specialist lawyer Lutz Auffenberg and his law firm Fin Law have specialized in the field of fintech and innovative technologies. In particular, blockchain technology and its regulation is the focus of his work. In his guest article he deals with the question of the extent to which token sales as a public offer differ from token sales as a private placement.

This article is first on the Fin Law Blog published.

In recent years, a new financing method for companies has emerged with so-called token sales. Companies seeking capital offer interested investors the opportunity to purchase blockchain tokens they have created themselves, which entitle the respective holder to assert certain rights against the issuer. The content of such rights can be very different. Tokens can, for example, give their holder access rights to special services of the issuer or grant discounts for the use of services in the respective business model of the issuer.

The tokens can also be equipped with yield, repayment or participation rights. Depending on the specific type of associated rights, according to the current administrative practice of BaFin, such tokens can be digital vouchers or access authorizations (so-called utility tokens), alternative means of payment (so-called currency tokens) or regulated investment products (so-called security tokens or investment tokens). act. In the case of the latter, the company offering the tokens regularly raises the question of whether the token sale may only take place on the basis of a sales prospectus prescribed by supervisory law and any additional offer documentation that may be required.

If the tokens to be offered represent transferable securities, shares in investment funds or other investments regarding the associated rights for the token holder according to the applicable regulations, both the issuer and any other provider must prepare extensive sales prospectuses and, if necessary, further sales documentation and have them approved by BaFin before they are allowed to offer the tokens publicly. The relevant regulatory regimes of the EU Prospectus Regulation, the Capital Investment Code (KAGB) and the Asset Investment Act (VermAnlG) provide for some exceptions. However, these usually relate to offers that are either aimed exclusively at professional investors or are of very low volume. However, all three regulatory regimes require the implementation of a public offer. If this essential requirement is not met in the case of a token sale, the project is also not subject to the prospectus and transparency obligations of the aforementioned regulatory regime.

Tools & tips for your Bitcoin tax return

We explain to you what you should look for in your crypto tax return and introduce you to useful tools for optimization.

To the guide >>

The EU Prospectus Regulation defines the public offer as a communication to the public in any form and by any means that contains sufficient information about the terms and conditions of the offer and the products to be offered to enable an investor to purchase or to decide the drawing of those products. The EU prospectus regulation only refers to securities according to its scope. However, the definition can also be used to interpret the term public offer for the offer of units in investment funds and investments, as neither the KAGB nor the VermAnlG contain their own definitions. Token offers are therefore to be classified as public if the offer is also directed at the issuer or the provider unknown investors and the key data such as the purchase price in particular are made known to them.

The term public offer is usually interpreted broadly, so that it is not sufficient to withhold key investor information from the investor in order to avoid the public offering of the offer. However, if an offer is aimed exclusively at investors already known to the issuer with whom private or business relationships existed prior to the offer, the offer may not be made public in individual cases. Such private placements can then be carried out without the prior preparation of sales prospectuses and other accompanying documentation.

Learn crypto trading

The entry-level course for trading Bitcoin and digital currencies

3 hours video course with professional trader Robert Rother
Learn to trade now