Anyone starting an STO, NFT or DeFi project should be aware of the legal implications. Otherwise there is a risk of repercussions. The law firm Scheiber Law advises entrepreneurs in the crypto sector on legal pitfalls – and helps with the preparation of the securities prospectus.
The ICO disaster has shown it: Anyone who is careless in the jungle of regulatory framework conditions on the financial market risks a blue lip. Since the US Securities and Exchange Commission (SEC) took legal action against alleged issuers of coin offerings, it has been clear that rules also apply in the crypto sector – and you should adhere to them.
But the design of the rules is confusing: some delinquents have violated the rules of the capital market laws less out of intent than out of ignorance – and now they have stress with the judiciary.
ICOs may now be a thing of the past. But the crypto sector spits out new (sometimes more, sometimes less) innovative business ideas almost every day. Anyone who, as an entrepreneur, is planning to participate in the emerging sector should therefore legally stand on safe feet.
STO: A securities prospectus is mandatory
This is especially true when it comes to STO. STO stands for Security Token Offering and describes the regulated counterpart to ICOs. With the STO, too, the issuer issues tokens to investors, but attaches clearly defined rights to them, such as participation, voting or profit participation rights. A typical example of an STO is a bond – in this case securitized in token form. There are several advantages to this. For example, interest payments can be paid out via smart contracts and are automatically sent to the wallet at regular intervals.
But the legal framework holds many pitfalls in store. For example, the EU prospectus regulation for securities – security tokens are usually included in this – provides for the creation of a securities prospectus. However, this step is often skipped, according to Dr. Florian Scheiber from Scheiber Law, a Liechtenstein law firm specializing in the blockchain sector.
“If you want to make a token offering within the EU, you first need a corresponding securities prospectus”
, says Scheiber in an interview with BTC-ECHO.
And Scheiber can help companies with this. If, after an examination by the law firm, it turns out that the intended token offering is actually a security token, it helps Scheiber Law when preparing the securities prospectus. Entrepreneurs are in good hands. After all, the Liechtenstein-based law firm specializes in precisely this activity – and can look back on a number of successful offerings. After Liechtenstein is a member of the European Economic Area (EEA), the EU prospectus regulation applies in Liechtenstein. Customers include Enercom, a Liechtenstein energy company that successfully launched its STO in cooperation with Scheiber Law in 2020.
The law firm also benefits from its location. After all, Liechtenstein is probably the most crypto-friendly country in a European comparison. With the “Blockchain Act”, the Principality has created a legal basis that significantly simplifies the launch of token projects compared to other EEA countries. In addition, prospectuses approved in Liechtenstein can be notified in other EU / EEA countries by way of EU passporting, which means that separate approval does not have to be applied for from the respective supervisory authority; approved.
NFT: “We’ll see what to do”
STOs may provide the greatest pitfalls. But the crypto sector is so fast-paced that the next hype is not long in coming. Attentive readers of BTC-ECHO will have noticed: The latest craze is now called NFT.
And so that issuers of non-fungible tokens do not have legal consequences, it is important to be legally on the safe side. If you plan to present a real asset such as a property as an NFT, you will quickly end up back in securities law, says Florian Scheiber. Scheiber Law accompanies the NFT emission process from the white paper to the finished product and even creates solid legal opinions on the respective projects. Or in short: “We’ll see what needs to be done.”
DeFi: “We don’t want to brake”
But that’s not all. In addition to NFT and STOs also advises Scheiber Law on DeFi. Because many are not at all aware of the legal implications in the field of decentralized finance. Setting up a liquidity pool could already represent major legal requirements:
“You could think that you are operating a trading system. And there it is that one would need approval. You can quickly find yourself in the area of a multilateral trading system – depending on where you do it, you quickly need a banking license. “
Dr. Florian Scheiber
And that’s where it gets complex. It’s good to have a law firm that can guide ambitious companies through the process.
Don’t the sometimes complicated legal requirements put off entrepreneurs? Not really, says Florian Scheiber. He is also more of a pragmatist:
“As far as it is justifiable, we as a law firm provide legal input, but still don’t want to slow down. It has to be balanced. “
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