Cryptoassets for funding and financing
Regulatory threshold
What attributes do the regulators think about in figuring out whether or not a cryptoasset is topic to regulation beneath the legal guidelines in your jurisdiction?
The Monetary Market Authority (FMA) operates a ‘technology-neutral’ method, that means that services involving cryptoassets are topic to the identical regulatory framework as conventional services. The underlying rationale is ‘similar danger, similar guidelines’. Whether or not and to what extent monetary providers regulation and securities legal guidelines apply relies upon totally on the precise product options and enterprise mannequin.
Enterprise fashions involving cryptoassets could also be topic to licensing necessities and are ruled by:
- the Banking Act – for instance, if funds are raised for funding into cryptoassets or within the case of dealing as principal or agent in cryptoassets that qualify as monetary devices beneath the Markets in Monetary Devices Directive (MiFID) II (2014/65/EU);
- the Payment Services Act 2018 – for instance, if info from a number of fiat cost accounts is consolidated, fiat funds are initiated or fiat currencies are transferred in the middle of cryptocurrency transactions;
- the Securities Supervision Act 2018 – for instance, if funding recommendation or portfolio administration supplied or buying and selling platforms are operated regarding cryptoassets which qualify as MiFID II monetary instrument.
- the Alternative Investment Fund Managers Act – for instance, if funds are raised for funding into cryptocurrencies or cryptoassets based on a pre-defined funding technique; and
- the Electronic Money Act – when issuing digital cash.
Purely technical providers don’t require a licence beneath monetary providers regulation. If, nevertheless, a technical billing service additionally included the switch of fiat funds, this might not be thought of a mere technical service and would have to be examined towards licensing necessities beneath Austrian monetary providers regulation.
Given the variety, complexity and fast evolution of enterprise fashions within the fintech house, the regulatory therapy of any enterprise fashions involving cryptocurrencies and cryptoassets will have to be assessed on a case-by-case foundation. Subsequently, the FMA encourages dialogue of the regulatory therapy earlier than partaking in any enterprise exercise. It has arrange a devoted specialist workforce and the Fintech Contact portal devoted to these areas deal with all fintech-related queries and printed steerage on the regulatory therapy of sure actions on the FMA website.
Investor classification
How are traders in cryptoassets categorized and handled otherwise?
There’s at present no particular regulation in place for classifying traders in cryptoassets and treating them otherwise. Normal investor classification beneath Austrian securities and shopper safety legal guidelines apply.
Preliminary coin choices
What guidelines and restrictions govern the conduct of, and funding in, preliminary coin choices (ICOs)?
At the moment, there isn’t any particular regulation in Austria governing the conduct of and funding in ICOs. Because of this, ICOs are ruled by normal securities and commodities legal guidelines. Relying on a token’s phrases and situations or options, sure token choices or gross sales could also be topic to prospectus necessities beneath Austrian securities legal guidelines until a prospectus exemption applies. Every provide have to be assessed on a case-by-case foundation and the regulatory evaluation will rely on the particular technical, useful and financial design of the devices provided.
ICOs might set off licensing and prospectus necessities beneath monetary providers regulation and securities legal guidelines.
For Austrian supervisory legislation functions, the FMA has broadly categorized tokens as under, noting that in follow hybrid varieties and overlaps often happen and that this classification is topic to any additional nationwide and worldwide authorized developments:
- Safety and funding tokens: tokens that characterize belongings, specifically, cost claims towards a particular issuer (eg, to take part in future earnings or money flows or tokens that characterize membership rights inside the that means of company legislation). The design of those tokens is commonly just like that of basic securities specifically bonds or shares. Safety tokens are subsequently often thought of as transferable securities beneath the Capital Markets Act 2019 and the Securities Supervision Act 2018. If a token is assessed as transferable safety, this has far-reaching regulatory implications not just for the token issuer (as this may increasingly set off prospectus necessities beneath Austrian securities legal guidelines) but in addition for the buying and selling platforms on which such a token is traded (as a result of they may have to be authorised as inventory exchanges or regulated buying and selling venues) or custodial or pockets suppliers (as a result of they may have to be authorised for safekeeping and administration). Even when a safety token doesn’t classify as transferable safety (notably as a result of that token or coin shouldn’t be transferable or its switch is restricted), however gives entry to capital or returns for a risk-sharing group of traders, it might classify as a Capital Markets Act funding and its providing might set off prospectus necessities beneath the act until a prospectus exemption applies.
- Utility tokens: there are numerous designs of utility tokens. Whereas they’re usually corresponding to vouchers, utility tokens happen in many various varieties and in addition fulfil the operate of cost tokens or safety tokens (hybrid design), making their classification for supervisory legislation functions slightly troublesome. If the token can be utilized just for designating a product or a service and isn’t in any other case related to any claims or if the token solely grants entry to a product or a service with out concurrently serving a cost function, then such tokens won’t be lined by supervisory legal guidelines. If, however, the token could also be redeemed with the issuer or different customers of the platform for using a product or a service, then it fulfils a cost operate just like a cost token.
- Cost and foreign money tokens: tokens which can be accepted as technique of cost for the acquisition of products or providers, or tokens that serve the aim of transferring cash and worth however don’t confer any claims towards a particular issuer (eg, bitcoin or ripple).
Safety token choices
What guidelines and restrictions govern the conduct of, and funding in, safety token choices (STOs)?
At the moment, there isn’t any particular regulation in place in Austria governing the conduct of, and funding in, STOs, so these are ruled by normal securities and commodities legal guidelines.
Safety tokens are often certified as transferable securities as outlined within the Capital Markets Act 2019 and the Securities Supervision Act 2018. They may be thought of an funding as outlined within the Capital Markets Act 2019, notably if a token shouldn’t be transferrable or its switch is restricted however it represents claims to capital or funding returns traders, as a bunch, are uncovered to joint danger and reward.
Safety tokens, and different forms of funding tokens, will sometimes be topic to prospectus necessities. An exemption applies if:
- the respective tokens are provided solely to certified traders;
- the providing is directed to lower than 150 individuals who should not certified traders of a European Financial Space member state; or
- the minimal funding is a minimum of €100,000 per investor.
Along with issuers, platform operators might also be obliged to publish a prospectus as a result of they might be thought of to be offerors of those devices beneath the Capital Markets Act 2019.
Stablecoins
What guidelines and restrictions govern the problem of, and funding in, stablecoins?
At the moment, there aren’t any particular guidelines governing the problem of and funding in stablecoins. Normal securities’, commodities’ and commerce legal guidelines apply.
Airdrops
Are cryptoassets distributed by airdrop handled otherwise than different forms of providing mechanisms?
Austrian legislation doesn’t differentiate between cryptoassets distributed by airdrop in comparison with different forms of providing mechanism and thus they’re topic to the overall securities, commodities and commerce legal guidelines of Austria.
Promoting and advertising and marketing
What legal guidelines and laws govern the promoting and advertising and marketing of cryptoassets used for funding and financing?
At the moment, there isn’t any particular regulation in place in Austria governing the promoting and advertising and marketing of cryptoassets. Subsequently, the promoting and advertising and marketing of cryptoassets is ruled by normal securities and conduct of enterprise legal guidelines which may require particular disclaimers and ought to be true, truthful and never deceptive, and should respect unfair competitors legal guidelines and trustworthy enterprise practices.
Buying and selling restrictions
Are traders in an ICO/STO/stablecoin topic to any restrictions on their buying and selling after the preliminary providing?
Buyers in an ICO/STO/stablecoin are at present not topic to any statutory buying and selling restrictions in Austria after the preliminary providing. Nevertheless, there could also be contractually agreed buying and selling restrictions. Additionally, the following re-sale of cryptoassets that classify as transferable securities might set off prospectus necessities beneath relevant securities legal guidelines.
Crowdfunding
How are crowdfunding and cryptoasset choices handled otherwise beneath the legislation?
The Different Financing Act, which is the primary regulation for public choices of securities and investments with emission volumes under the thresholds of the Capital Markets Act 2019, often known as ‘crowdfunding’, doesn’t deal with choices of cryptoassets otherwise from choices of different securities or investments. If the cryptoasset is assessed as a safety or funding, the general public providing of the cryptoassets falls beneath the scope of the Different Financing Act, until the Capital Markets Act 2019 applies.
Switch brokers and share registrars
What legal guidelines and laws govern cryptoasset switch brokers and share registrars?
At the moment, there isn’t any particular regulation in place in Austria governing cryptoasset switch brokers and share registrars. If the cryptoasset qualifies as a safety or funding, normal securities, commodities, commerce and securities legal guidelines apply.
Anti-money laundering and know-your-customer compliance
What anti-money laundering (AML) and know-your-customer (KYC) necessities and tips apply to the providing of cryptoassets?
Actions involving cryptoassets are topic to Austrian and EU AML necessities in the event that they require a licence beneath monetary providers regulation (eg, as the availability of cost providers) or if they’re topic to the AML necessities beneath commerce legal guidelines (eg, as a result of beneath Austrian commerce legislation, industrial operators, together with auctioneers, are topic to the AML necessities in the event that they make or obtain money funds of a minimum of €10,000).
Furthermore, sure suppliers of providers regarding cryptocurrencies are turn into topic to the AML and KYC and buyer due-diligence necessities, reporting obligations and registration necessities with the FMA. This impacts suppliers providing a number of of the next providers:
- providers to safeguard non-public cryptographic keys to carry, retailer and switch digital currencies on behalf of a buyer (custodian wallets);
- exchanging digital currencies into fiat currencies and vice versa;
- exchanging a number of digital currencies into one another;
- transferring digital currencies; and
- the availability of economic providers for the issuing and promoting of digital currencies.
If cash laundering or terrorist financing is suspected, this must be reported to the Cash Laundering Reporting Workplace.
Sanctions and Monetary Motion Process Drive compliance
What legal guidelines and laws apply within the context of cryptoassets to implement authorities sanctions, anti-terrorism financing ideas, and Monetary Motion Process Drive (FATF) requirements?
Anti-terrorism financing ideas and the FATF requirements are lined within the Monetary Markets Anti-Cash Laundering Act and the Austrian Commerce Act. The place relevant, EU sanctions’ laws might also apply.
Legislation acknowledged date
Appropriate on
Give the date on which the above content material is correct.
23 October 2020.
