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Prospectus in the case of STOs – guilt and atonement?

the Security Token Offerings (STOs) are becoming increasingly popular. Stokera, Bitbond and Bitwala are just three of the actors, the advertise active with STO

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Prospectus in the case of STOs – guilt and atonement?
the Security Token Offerings (STOs) are becoming increasingly popular. Stokera, Bitbond and Bitwala are just three of the actors, the advertise active with STOs. The BaFin has approved for the Bitbond is the first STO on the German market. Prerequisite for this was that the Start-up creates a so-called securities prospectus by the BaFin to approve. Since then, many Start-ups wondering whether they, too, are obliged to prepare a prospectus and what's up with that. The innovative entrepreneurs shy away, however the bureaucratic hurdles. Can you blame no one, because of the poznań Wernher Freiherr von Braun was once: "We can overcome gravity, but the paperwork is crushing us."

By Michael Kissler
18. May 2019BTC$7.314,00 1.72%part Facebook Twitter LinkedIn xing mail

is not, However, after the turbulent ICO years 2017 and 2018 also clear that without financial oversight. Too many dubious providers shook the confidence placed in by Scams and false promises. Sorry for carrying goods in addition to the investors of the ICOs, especially the honest vendor, the term "ICO" was almost synonymous with "Scam".

respect for The bureaucratic hurdle, however, is not unfounded. The securities prospectus is for young companies that are still before the round of funding, a large financial hurdle. Because on the one hand, the creation of such a prospectus by a qualified and as a rule, large law firm will cost easily in excess of EUR 50,000. Alone the BaFin fee is 6500 Euro. Therefore, an STO must not only technically, but also legally, to be properly planned.

necessity of the prospectus

to be A prospectus does not need to each Token Offering published, but only if the tokens represent securities. Many, however, is not aware that STOs have your name, therefore, that the Token of the Securities, i.e. securities that represent. A further requirement for a Prospectus requirement is that the securities are to be made public, so a variety of people, available for purchase. A STO, for example, is advertised on a website and can, in principle, acquire each of the tokens, is a public offering of securities.

contents and verification of the prospectus

The contents of the prospectus, how should it be otherwise, by law, strictly regulated. It is not enough, that a White Paper or even a Light Paper will be published that describes the STO somehow. Are required, among other things, the description of the risk factors for the seller and its industry-specific, as well as a description of the business model. Finally, the buyer to be informed about the value of paper and make an informed decision. In the case of a STO, the STO, and the block chains of specific risks play a significant role. Because what happens when someone transmits its Token to a non-compatible Wallet? And how it behaves with the use of special purpose entities, which in the case of an Equity Token Offering to the "real" company to hold shares?

filed with the prospectus, shall examine the BaFin, the prospectus, within approximately 20 working days for completeness and clarity. You don't checks whether the STO itself is serious, so the accuracy of the prospectus. However, this should not be misunderstood, because should be the content to be false, this may result in a liability to the investors. The BaFin accepts the prospectus, the approval of a cross-border basis throughout the European economic area (so-called EU passport). This means that a prospectus is not sufficient, and the Supervisory authority of the other country must only be notified when the Token is to be offered.

exemptions from the Prospectus requirements

Who does not like all the paperwork or a creation can not afford, for the exemptions from the Prospectus requirement are interesting.

The most relevant exceptions are the border, the 150-investor exception, and the 8-million-Euro. The STO is addressed to fewer than 150 persons per member state of the EU, you need to publish a prospectus. Who holds the investors circle so small, it does not need to worry about a securities prospectus.

Furthermore, no prospectus is required, if a Token to be offered at a value of less than eight million euros in the European economic area open to the public. Really paper free an STO but only if the STO is implemented a value of less than EUR 100,000. The German legislator could not separate the namely complete of the paperwork. Therefore, for STOs between € 100,000 and eight million euros, that is, a so-called securities information sheet (WIB) must be published. This is a small securities prospectus, which contains important information about the securities (i.e. the Token) and the publisher.

The WIB, however, is also without a lot of hassle feasible. The WIB must not exceed three A4 pages. On the other, no permission is through, but only a Deposit in the case of the BaFin is required. So, it's three pages of Paperwork necessary to be allowed to up to eight million euros to take. That sounds feasible, the effort is manageable. The convinced even the die-hard bureaucracy opponent. Although also need to be in the WIB and the statutory requirements complied with, the attorney's fees are, however, significantly more manageable. And, Hand on heart, some of the STO could have been with a view to the money that has been collected on the extensive and expensive securities prospectus may save.

a blessing and a curse

For STOs may be applied to the legal regulations, wisely, lead to improved credibility and tarnished reputation of the scene at least a little polishing. The bureaucratic hurdles are in the case of the prospectus, in the extreme, but there are legal ways to keep the bureaucratic burden and the costs low. And who knows, maybe the red tape is the necessary step to make to STOs in society.

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