It is of utmost importance for issuers of security tokens to know when they are legally allowed to start marketing their token sale. The European Prospectus Regulation and the German Security Prospectus Act allow marketing activities prior to the approval of the prospectus as long as certain obligations for the protection of investors are observed.
Medium sized businesses and startups may also be interested to procure funds via an STO. But the costs for security prospectuses are often way too high for issuances with a rather small volume. Security token offerings of up to 8 million euros in total volume can also be based on a three-page security information sheet. That way, the high costs for drawing up a full prospectus can be massively reduced.
Many STO issuers would like that their security token gets listed at a crypto exchange after the token sale is over. What are possible legal consequences of a security token listing and are there consequential obligations for the emitters?
It can be read in many publications that the German Debenture Bond Act would not be applicable to bonds based on security tokens instead of paper documents. But is this really the case and why is this qustion of importance to security token issuers?
Under which conditions do startups have the possibility to conduct Security Token Offerings on basis of a so called security information sheet instead of a full securities prospectus approved by BaFin and are there any special implications to face?
BaFin will qualify security tokens as securities in the future already for the reason that their tradability on the capital markets is highly increased by their blockchain design. Does the authority go beyond it's competencies?