BaFin

Initial Coin Offerings: BaFin publishes advisory letter on the classification of tokens as financial instruments

Date: 28.03.2018

For some time now, BaFin has been receiving an increasing number of queries enquiring whether tokens and virtual currencies (referred to as ”tokens“) marketed to investors in initial coin offerings (ICOs) are considered to be financial instruments.

The supervisory authority has now published an advisory letter in which it states its position on the regulatory classification of tokens in the field of securities supervision. This concerns all market participants providing services related to tokens, dealing with tokens or publicly offering tokens.

In order to fully satisfy any legal requirements, these market participants must give careful consideration to whether the tokens constitute a regulated instrument, for instance a financial instrument or a security. In cases of doubt, they should contact the competent BaFin divisions in good time.

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