Blockchain & more

Blockchain | Crypto | Token Offering | DeFi | Prospectus | FinTech

We advise and represent banks and financial service providers as well as payment service providers, e-money institutions and VT service providers both in obtaining or renewing licences to conduct business under the Banking Act (BankG), Payment Services Act (ZDG), E-Money Act (EGG) or Token and VT Service Providers Act (TVTG) and within the scope of ongoing supervision by the Financial Market Authority (FMA) Liechtenstein.

The range of advisory services includes the original drafting of contractual and information documents required by supervisory law as well as the revision of existing legal documents in the event of new legal requirements or amendments.

In addition to traditional providers, we also advise FinTechs. In the FinTech sector, comprehensive regulatory advice is essential from the outset. Especially in this area, we have extensive advisory experience and expertise.

In our advice, we also place a special focus on crypto assets, cryptocurrencies, tokens and the use of innovative technologies such as blockchain technology.

We also advise companies outside the financial sector that want to take advantage of blockchain technology or cryptocurrencies and implement the technology in their business processes.

In addition, we provide support in the creation and revision of compliance measures.

Finally, we specialise in the area of Security Token Offering (STO) and Initial Coin Offering (ICO). In addition to proven in-depth legal expertise, we also have extensive professional experience due to STOs that have already been carried out several times. We have recently started advising on Non-Fungible Tokens (NFT) and Decentralized Finance (DeFi).


Token Offering

What are the different types of tokens?

Security tokens imitate classic securities and can basically be structured like bonds or shares. Holders acquire a claim to recurring payments (e.g. interest, dividends) or can exercise voting rights.

The purpose of payment tokens is the payment function. If a contractual partner accepts them as a means of payment, goods or services can be purchased with them. The best-known payment token is Bitcoin.

Utility tokens are primarily used to give the holder an advantage in relation to a specific product or service. They are most comparable to a key that provides access or a voucher.

What is a Security Token Offering (STO)?

Security Token Offerings (STOs) are a comparatively new method of raising capital from investors. In the context of an STO, companies offer interested investors blockchain tokens they have created themselves, which are linked to certain rights, e.g. a share in the company's profits. Companies can issue equity instruments (e.g. shares), debt instruments (e.g. bonds) or hybrid products.

What is an Initial Coin Offering (ICO)?

Security token offerings are not the only form of raising capital by issuing their own blockchain tokens. The various manifestations can be summarised under the term Initial Coin Offering (ICO). According to common usage, this includes security tokens as well as utility tokens and payment tokens.

What is an Non-Fungible Token (NFT)?

 

Blockchain technology is always subject to progressive development. In the process, new application possibilities are also created. Via smart contracts on blockchain platforms, it is now possible to produce tokens that are not replaceable, not exchangeable and not identical in content, but have individual properties. Such tokens are called non-fungible tokens (NFTs).

NFTs as a digital asset

In their true form, NFTs are digital assets that do not represent a physical asset.

The best example is the artwork "Everdays: The first 5000 days", which was auctioned off at Christie's in March 2021 and exists in its original form only as a digital signature in the blockchain (note: the amount auctioned off was the equivalent of almost USD 70 million). Other unique items, such as short video sequences of NBA basketball games (NBA Top Shot), digital trading cards, Twitter posts and virtual properties in computer games are also sold digitally as NFTs.

NFTs as digital representation

NFTs do not stop at digital assets, however, and physical assets such as real estate, art paintings, classic cars are also beeing "tokenised" as NFTs (so-called "digital twins"). Sometimes the NFT representing a property right or co-ownership right can be qualified as a security token, so that consequences under financial supervision law (e.g. prospectus obligation) must be observed here.

What is Decentralized Finance (DeFi)?

 

DeFi refers to applications and companies that offer financial services based on decentralised blockchain technology. Decentralisation takes place via smart contracts, in which computer protocols (codes) carry out the settlement and store all transaction data in a "distributed ledger". Users interact with the help of decentralised applications (DApps) and peer-to-peer (P2P).

Application area of DeFi

  • Decentralised marketplaces/exchanges (DEXes) (e.g. Uniswap)
  • Monetary banking services: Issuance of stablecoins (e.g. DAI, USDC), insurance, mortgages.
  • Borrowing and lending (e.g. compound)

Advantages of DeFi?

DeFi does not require intermediaries. Users basically have easy access to financial services and lower-income individuals can also benefit from the financial services offered. Costs are reduced with DeFi. Decentralised credit protocols enable, for example, the immediate processing of transactions, no credit checks, standardisation in the granting of loans.

What are decentralised Liquidity Pools (LPs)?

LPs are one of the weighty technologies behind DeFi. An LP is a sum of money deposited into a smart contract by liquidity providers (can be anyone who receives trading fees in return). LPs are used to fund decentralised trading (Automated Market Maker, AMM), credit provision and generally provide liquidity in DeFi's areas of application. Financial market supervisory aspects should be taken into account.

We provide the following services for you:

  • Holistic advice on Blockchain | Crypto | Token Offering | DeFi | Prospectus | FinTech
  • Advice on Security Token Offerings (STO) and Initial Coin Offerings (ICO)
  • Advice in connection with Non-Fungible Tokens (NFT) and Decentralized Finance (DeFi)
  • Preparation of legal opinions
  • Preparation of the securities prospectus in accordance with the EU Prospectus Regulation
  • Preparation of the basic information pursuant to the TVTG

We have already advised the following companies:

Enercom AG

We provided legal advice in the preparation of the token prospectus and prepared the regulatory opinion.

Maji HOLDING AG

We provided legal advice in the preparation of the token prospectus and prepared the regulatory opinion.

Power Ledger Pty Ltd

We prepared a regulatory opinion with regard to the possible classification of POWR tokens as financial instruments, securities and e-money.

We are currently advising:

Calidris Fintech AG

We provide legal advice in the preparation of the token prospectus and prepare the regulatory opinion.

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