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European Company and Financial Law Review

Ed. by Bergmann, Alfred / Fleischer, Holger / Goette, Wulf / Hirte, Heribert / Hommelhoff, Peter / Krieger, Gerd / Merkt, Hanno / Teichmann, Christoph / Vetter, Jochen / Weller, Marc-Philippe / Wicke, Hartmut

SCImago Journal Rank (SJR) 2017: 0.258
Source Normalized Impact per Paper (SNIP) 2017: 2.167

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Volume 15, Issue 4


Crypto-Securities Regulation: ICOs, Token Sales and Cryptocurrencies under EU Financial Law

Dr. Philipp Hacker LL.M. (Yale)
  • Corresponding author
  • A.SK Fellow, WZB Berlin Social Science Center; Research Fellow, Centre for Law, Economics and Society, and Centre for Blockchain Technologies, both UCL.WZB Berlin Social Science CenterResearch Fellow, Centre for Law, Economics and Society, and Centre for Blockchain TechnologiesBerlinGermany
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/ Dr. Chris Thomale LL.M. (Yale)
  • Professor at the University of Bremen, Faculty of Law. This paper benefitted from comments by Hermann Elendner, Katja Langenbucher, Julian Leithoff, Nina Siedler, Aaron Wright, a very helpful anonymous reviewer, and audiences at the 5th Humboldt Blockchain Night, the conference on Blockchain and the Law at UCL, and a workshop on cryptocurrencies at the University of Reading. All errors remain entirely our own.University of BremenBremenGermany
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2018-12-07 | DOI: https://doi.org/10.1515/ecfr-2018-0021

Cryptocurrencies, such as bitcoin and ethereum, have not only risen to public attention as novel means of payments, but also as facilitators of initial coin offerings (ICOs, also called token sales). In these entirely online-mediated offerings, entrepreneurs sell tokens registered on a blockchain in exchange for cryptocoins. Buyers receive tokens that can be understood as cryptographically-secured coupons which embody a bundle of rights and obligations. In July 2017, the SEC released an investigative report that highlighted that such tokens can be subject to the full scope of US securities regulation. It is unclear, however, to what extent EU securities regulation is applicable to ICOs and, particularly, whether issuers have to publish and register a prospectus in order to avoid criminal and civil prospectus liability in the EU. In conceptual terms, this depends on whether tokens are considered “securities” under the EU prospectus regulation regime. Against this background, this paper develops a nuanced approach that distinguishes between three archetypes of tokens: currency, investment, and utility tokens. It analyzes the differential implications of each of these types, and their hybrid forms, for EU securities regulation, and develops policy proposals for their regulation.

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Published Online: 2018-12-07

Published in Print: 2018-12-05

Citation Information: European Company and Financial Law Review, Volume 15, Issue 4, Pages 645–696, ISSN (Online) 1613-2556, ISSN (Print) 1613-2548, DOI: https://doi.org/10.1515/ecfr-2018-0021.

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