ICO / token sale
Companies and projects have increasingly relied on the sale of digital assets, or tokens, as a means of fundraising. These tokens generally do not grant the holders an ownership interest in the issuing company or project, but may provide governance rights, access rights or other utility. This has been conducted through public sales known as initial coin offerings (ICOs), proliferation through token generation events (TGEs) or private sales, among other mechanisms. While showing characteristics of traditional methods of fundraising, there are a range of unanswered questions related to the legal classifications of such products. As ICOs and TGEs will usually be distributed online and internationally, there is usually no single legal framework applying to such transaction, and the legal framework of each market in which the tokens may be offered or sold needs to be considered.
Attitude of the country towards ICOs/token sales
Considering that ICO/token sale is regulated by the same legislation that covers the cryptocurrencies market, please refer to the answer in DLT/Cryptocurrencies section.
Presence of any explicit regulation on ICOs and the issuance of token/coins
Currently, the ICOs and the issuance of token/coins in Albania are regulated in addition to the DLT Law, by the following regulations: i) Regulation no. 211, dated 25.11.2021 "On the licensing of entities operating as digital token agents" and ii) Regulation no. 210, dated 25.11.2021 "On the capital adequacy of entities operating in financial markets based on the distributed ledger technology ".
Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins
Under the DLT Law, holding, storing, and transferring of digital tokens and/or virtual currencies is carried out by the “Third Party Custody Wallet Provider” which are obliged to be licensed by the BoA.
Obligations and requirements to issue token/coins
Please refer to the answer to question f (ii) above.
Classification of token/coins in the jurisdiction
Under the DLT Law, depending on the purpose for which they are used, tokens are categorised as follows:
i. Payment Tokens – used as payment method;
ii. Security Tokens – used as security; and
iii. Asset Tokens – used as investment product.
Presence of a duty to publish a prospectus bevor offering token/coins to investors
Under the DTL Law, Security Token Offerings with obligation to publish a Full Prospectus are those with a total consideration equivalent to, or higher than, Euro 1.000.000,00 or its equivalent in ALL, calculated over a period of 12 months.
Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties
The AML regime is triggered by the provision of services for (1) the purchase, sale and transfer of virtual assets and (2) safekeeping or other instruments enabling control over virtual assets, both of which fall under the scope of Virtual Asset Service Providers.
Art. 3.25 of the AML Law defines Virtual Assets (VAs) as a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes.
Art. 3.26 of the AML Law defines Virtual Asset Service Providers as any natural or legal person who as a business conducts one (1) or more of the following activities or operations for or on behalf of another natural or legal person –
i. exchange between virtual assets and fiat currencies;
ii. exchange between one (1) or more forms of virtual assets;
iii. transfer of virtual assets;
iv. safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
v. participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
The above definition is wide enough to include exchanges and transfer services, wallet providers, custodial services such as those that host wallets or maintain custody or control over another person’s VAs, wallets, and/or private keys, as well as providers of financial services to an ICO. It can also include escrow services, like those involving smart contract technology, when the entity providing the service has custody over the funds.
In light of these provisions, it can be argued that the most crucial component that triggers the AML regime is the transferability of the tokens and its exchangeability on the secondary market.
Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties
Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction
No official data concerning local market.
Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area