CEU Electronic Theses and Dissertations, 2023
| Author | Safro, Sonija |
|---|---|
| Title | Jurisdiction Shopping in Security Token Offerings: the United States vs. the European Union |
| Summary | This Thesis compares the EU and the US regulation of Security Token Offerings (STOs). STOs are a relatively new regulatory issue, but both the US and the EU have already reacted to it by, e.g., taking actions against non-compliant issuers in case of the US and developing new legal instruments and/or amending the old ones in case of the EU. The US government has introduced many bills precisely on crypto regulation as, for instance, the Lummis-Gillibrand Responsible Financial Innovation Act. However, none of those that would be relevant for STOs are binding yet, so regulators apply the existing regulations and case-law. As for now, the US is known for its regulation-by-enforcement approach as employed by the Securities and Exchange Commission (SEC). The EU followed a different path: the European Commission proposed three Regulations and one Directive covering and relating to crypto assets, although there are not many known cases brought by National Competent Authorities (NCAs) against issuers of security tokens. Notably, MiCA (not in force yet) provides that some crypto assets can qualify as financial instruments, while DLT Pilot Regime has officially included distributed ledger technology (DLT) financial instruments into the scope of MiFID II ‘financial instrument’ definition. The approach on STOs regulation differs between these jurisdictions not only formally but also in substance as they impose different requirements on security tokens’ issuers. Issuers willing to lawfully market their security tokens in a large and developed market, such as the US or the EU, should understand which jurisdiction is more favorable specifically for them. Therefore, the aim of this Thesis is to determine a more favorable jurisdiction from an issuer’s perspective, i.e., which jurisdiction would be preferred by a company willing to conduct an STO based on its needs. The criteria for comparative assessment of the jurisdictions are the following: 1) legal status of STOs (are they legitimate); 2) requirements for conducting STOs; 3) the restrictiveness of applicable limitations. The main research question therefore is which is the preferrable jurisdiction for conducting an STO considering the legal status, requirements, and limitations in the US and the EU? For answering this question, the following issues must be addressed: definition of security tokens; laws and regulations applicable to STOs; case law on STOs, and the practice in STOs’ field in both jurisdictions. The Thesis will address the US’s federal law and the EU’s supranational law such as Regulations and/or Directives, since these are the two of the world’s major financial markets. Additionally, since securities laws and regulations in the EU are not harmonized to the full extent, the Thesis will cover the most crypto-friendly jurisdictions in this region, such as Luxembourg, Malta, and Estonia. Moreover, the Thesis incorporates the conducted interviews and consultations with experts and professionals in the field of security tokens regulation. |
| Supervisor | Tajti, Tibor |
| Department | Legal Studies LLM |
| Full text | https://www.etd.ceu.edu/2023/safro_sonija.pdf |
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