Blockchain-lawyer Markus Kaulartz: STOs, and the role of the securities prospectuses

Dr. Markus Kaulartz is a former software developer, and today, a lawyer at CMS Germany, is one of the largest European firms. On the basis of his technical Expertise, he advises Start-ups and other Tech companies in the implementation of innovative business, such as in the implementation of block chains or the tokenization of assets models. What you have to consider in the choice of the Token-Sale-jurisdiction and what are the anticipated costs for the preparation of a securities prospectus, has betrayed us, Dr. Markus Kaulartz in the Interview.

By Sven Wagenknecht
15. June 2019BTC$8.809,00 2.27%part Facebook Twitter LinkedIn xing mail

BTC-ECHO: a Lot of Start-ups by result in your STO in jurisdictions that are known to have a very crypto-friendly regulation. Liechtenstein, Malta or Gibraltar would be mentioned here. A good idea or you recommend, but to go to the rocky path on the BaFin in Germany?

Markus Kaulartz: I often hear that most Start-ups is the use of a relocation to Liechtenstein, etc. from a legal point of view, but, unfortunately, little. Apart from the fact that it is really a lot of effort and nerves it costs to start a business abroad and to manage, in particular, are overestimated, the legal benefits are often completely. It is important, namely: I sell Tokens to the German, Spanish, Swiss market, respectively, German, Spanish, Swiss law.

enough already, at an event in the respective country, the product to present. Although there are in the regulated area, partially for the possibility of ports of the decisions of the financial authorities in other countries of the EEA passport. This is, however, not fully, and on the other, this does not help the fact that every legal system has its own civil law. Say: at the Latest at the question of how rights in a Token embodies can be, it brings with it, in many cases, any profit that the Issuer is seated, for example, in Liechtenstein, its Initial and secondary market investors, but in other countries.

The way over to the BaFin, I think, by the way, not rocky. The BaFin is positioned in the area of "crypto" is very good, has many employees, is internationally highly regarded and is particularly valuable information. A blockade can't see it.

BTC-ECHO: In Germany it is still not possible to authorize equity-token, but merely the enjoyment of the rights surrendered. What do you think of the chances that we get here in a timely manner, the necessary change in the law, that Security Token can be recognised as equity?

Markus Kaulartz: This is in my opinion very realistic, the discussions are already in full swing. In addition to any statutory adjustments is of course also essential, as the relevant Player behavior on the market; including the BaFin, the stock exchanges, Clearstream and maybe even the custodians. My impression of the BaFin is that you have to be very open, but of course nothing wants to rush, but the market at the Moment, closely observed.

BTC-ECHO: Must be inevitably an expensive prospectus will create, if you want to give out Security Token to retail investors? There are Alternatives for less financially strong Start-ups?

Markus Kaulartz: , There are numerous exceptions to the Prospectus requirement in the securities and in the investment law, for example, the 2.5 - and 8-million mark: For this Crowdfunding exemptions is regulated in the law, a Hard Cap of 2.5 and 8 million euros, a significantly lower formal requirements must be met.

On the other hand, the requirements to the emission of the platforms, the self-license to be partly liable for the rise – this is often overlooked. A prospectus is not apart also necessary in the case of a minimum investment per Investor of 100,000 or 200,000 euros, or if only a limited circle of persons is addressed. Since there are so many exception rules, the danger is very great, to the close of a specific project to another. Each case is stored in the Detail different and alone the question of whether a Token is tradable or not, has massive legal implications.

BTC-ECHO: the value of paper leaflets really so expensive?

Markus Kaulartz: A prospectus should only tackle, who can schedule a high five digit or low six-digit amount for it. For less, the initial submission can be in the case of the BaFin to implement, but usually not the entire preparation up to the approval of the prospectus, including legal and valuation to Finance. Consuming it is only after the initial submission, if the BaFin to notify its observations to the prospectus and to submit on the basis of these observations, three -, four -, five Changes to the prospectus. Since this has a lot to do with the very specific business model and the specific circumstances of the Issuer, may also remove the Software in the creation of brochures only partially work, for example, in the structuring of the prospectus, or to query information from the Issuer. In addition, the experience shows that also legal issues popping up left and right that have to do with the actual prospectus only on the edge of something, but nevertheless, and resolved must be detected.

BTC-ECHO: What are the main legislative barriers that prevent a faster Blockchain-adaptation are, in your opinion?

Markus Kaulartz: There are many areas in which we would need for the block chains have their own regulations. The Tokenization, i.e. the embodiment of the Right hand in Token, is a part of the example. But we must not be naive and hope that the legislature will provide us in the short term, with all the necessary laws.

Many of the Start-ups that come to me are quite desperate, since you will lose the bulk of your business model applicable provisions of the Overview and the legal situation as "unclear" feeling. I will tell you first that in the case of innovative business models never legal certainty has prevailed, and that this is not a peculiarity of block chains. Here are the Start-ups need so surely a little bit of courage, and the lawyers need to be in the Rest of the first law, not only as a preventer perceived. We need creative legal solutions on the basis of the applicable law – the legislature is not a solution waiting for a lot of Start-ups, it just might take too long and is not always helpful. Useful short-term Guidance would be but certainly on the part of the authorities.

BTC-ECHO: For how realistic and appropriate do you consider the use of the Blockchain in the public administration?

Markus Kaulartz: is Very useful as a background technology, especially in the area of identification, however, only in the long term is realistic. Fortunately, we have overcome the time of the illusory projects, for example the land register on the Blockchain. The old computer science adage "never change a running system" is not, finally, also in the case of digitization projects by the Hand, and we should not invent problems where there are none. We give away the Potential of this technology for other areas in the Rest of the increases not just the acceptance. But I also see good people in the public administration, which have realized the true Potential of block chains and I'm curious to see what will become of the numerous Proofs of Concept.

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