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Part II The New EU Prospectus Rules, 6 Transferable Securities and the Scope of the Prospectus Regulation: The Case of ICOs

Guido Ferrarini, Paolo Giudici

From: Prospectus Regulation and Prospectus Liability

Edited By: Danny Busch, Guido Ferrarini, Jan Paul Franx

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 05 February 2023

Prospectus — Securities — Financial regulation

This chapter analyses the concept of transferable security in the Prospectus Regulation and tests the flexibility and latitude of this concept with reference to the recent phenomenon of Initial Coin Offerings (ICOs). It firstly examines MiFID's (Markets in Financial Instruments Directive 2004) definitions of financial instrument and transferable security, and then focuses on the latter with special regard to the Prospectus Regulation. The chapter subsequently introduces the ICO phenomenon and the categories of tokens that are issued through blockchain in practice. It goes on to consider the treatment of ICOs under US securities regulation and then focuses on whether tokens issued in ICOs qualify as transferable securities under the EU Prospectus Regulation. The chapter gives a positive answer not only with respect to investment tokens, but also to hybrid tokens which present an investment functionality. It concludes that in given circumstances also utility tokens could qualify as securities.

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