BaFin admitted it was receiving many inquiries about the status of tokens and cryptocurrencies distributed to investors through ICOs, according to Bitcoin News. Bafin educates the public that tokens are typically generated using distributed ledger or blockchain technology, and ICOs are used to raise funds for startup projects.
The federal financial supervisory authority advises participants in ICOs to check and follow rules applicable to regulated financial instruments, such as securities. The legal classification of tokens requires precise examination, Bafin says. Depending on their design, tokens can be defined as securities, shares or used to issue derivatives.
Individuals and businesses should approach Bafin in case they have any doubts about regulations. The note clearly states that for regulatory purposes, ICOs, tokens, coins and cryptocurrencies are subject to the existing provisions in the field of securities supervision and other relevant national and EU laws.
Companies should also fulfil any obligations under the Banking Act and the Capital Investment Code, the Insurance Supervision Act and the Payment Services Supervision Act. Bafin’s Department of Licensing will investigate cases in which special permissions may be required. If relevant regulatory requirements are not met, respective projects or transactions may be prohibited. In addition, such violations may constitute administrative offenses and result in fines.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now