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Security Token Offering in Estonia?

This blog post was first published on our Medium channel. We’ll put the excerpt here, but for the full article, please click in this link to read the full article on Medium.

 

Security tokens and regulated markets are coming. It’s yet to see whether the regulators of some countries will come out with a simplified approach for launching STOs. The current requirements may be too overwhelming (financially) for startups and companies in a growth stage.

There’s a lot of discussion about security tokens in the blockchain communities, and rightfully so. While the ICO market is still booming, many industry insiders are waiting for the explosion of the security token markets.

The potential of the security tokens is simply incredible- it’s an estimated 10 trillion dollar market. It’s also a huge opportunity for the countries and investments they can attract.

It remains to be seen which countries will simplify the STOs in a way that it becomes a no-brainer for the entrepreneurs to make it as a number one destination, and still have credibility as a jurisdiction. And it’s not only the question of which countries will want to do it, it’s also a question of which countries can do it. For example, EU has strict regulations on issuing securities, and it’s very difficult for the Member States to simply ignore them.

So, what about Estonia?

Naturally, to do a security token offering (STO), you have to follow a set of laws in place.

Generally, if you want to issue security tokens, you’ll need to register the prospectus with the Estonian Financial Supervision Authority. There are some exceptions to this rule though. If at least one of the following conditions are met, the prospectus is not required:

  • an offer of securities is addressed solely to qualified investors, or
  • an offer of securities is addressed to fewer than 150 persons per Contracting State, other than qualified investors, or
  • an offer of securities is addressed to investors who acquire securities for a total consideration of at least 100,000 euros per investor, for each separate offer, or
  • an offer of securities with the nominal value or book value of at least 100,000 euros per security, or
  • an offer of securities with a total consideration of less than 2,500,000 euros per all the Contracting States in total calculated in a one-year period of the offer of the securities.

If none of the above conditions exist, the offer is deemed to be a public offer, in which case a prospectus for the offer must be prepared and registered with the EFSA.

Want to read further about the prospectus requirements and the requirements set for company that wishes to issue security tokens?

Click here.