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
Although blockchain and DLT technologies business projects are showing high growing rates over the last years in Argentina, ICOs/token sales lack a legal framework in Argentina. This lack of certainty on the legal framework applicable to ICOs/token sales causes that Argentinean entrepreneurs in the crypto segment seek for friendlier foreign jurisdictions to carry out their token sales.
Presence of any explicit regulation on ICOs and the issuance of token/coins
There is no specific regulation applicable to the sale of crypto currencies or other tokens under securities laws and capital markets laws in Argentina. Under Argentine law, securities are negotiable instruments into which the issuer incorporates credit rights. Nevertheless, it cannot be assumed that this is the case for crypto currencies or other tokens issued by a centralised entity, and case-by-case analysis is required. Following the example of securities and exchange commissions in other parts of the world, in December 2017, the CNV issued a communication on ICOs to warn investors of their potential risks. In May 2021 a similar communication was issued jointly by the CNV and the Central Bank of Argentina.
The CNV has clarified that ICOs would not, in principle, be subject to the regulations that apply to the capital markets. Nevertheless, it has also stated that certain ICOs may be subject to the control of the CNV, depending on their structure and particular characteristics.
Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins
As previously referred, there is no specific regulation on the sale of crypto currencies and other tokens. However, there are currently several draft laws aimed at regulating various aspects of crypto assets and the crypto currency industry.
Obligations and requirements to issue token/coins
There is no specific regulation on the sale of crypto currencies and other tokens. Therefore, no special licenses are required in this respect.
Classification of token/coins in the jurisdiction
Although there is no specific regulation on crypto assets, doctrine in Argentina follows the same criteria for classifying crypto assets used in other parts of the world. In this respect, the Argentine doctrine classifies crypto assets in the following categories: (i) Payment tokens or crypto currencies; (ii) Utility Tokens; and (iii) Security Tokens or Asset Tokens.
Presence of a duty to publish a prospectus bevor offering token/coins to investors
As previously referred, there is no specific regulations on crypto currencies and other tokens. On a case-by-case analysis, the CNV could consider that a token sale could be subject to the regulations that apply to capital markets.
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
As previously referred, there is no specific regulations on crypto currencies and other tokens. However, the government has issued regulations related to taxation and the prevention of money laundering and the financing of terrorism regarding crypto assets. Regarding prevention of money laundering and financing of terrorism, the UIF dictated Resolution 300/2014, which determined that certain obliged parties (“Sujetos Obligados”) must inform the government body about all transactions involving crypto assets.
Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties
Although ICOs and token sales have no specific regulations in Argentina, there are several draft laws aimed at regulating various aspects of crypto assets and the crypto currency industry. Meanwhile, both the CNV and the Central Bank have issued joint communications warning the general investor public on the potential risks associated to ICOs and token sales. CNV and the Central Bank warns investors about the following potential risks associated with ICOs: (i) a lack of specific regulations; (ii) price volatility and liquidity risks; (iii) the probability of fraud; (iv) inadequate access to relevant information; (v) the early stage of projects; (vi) the probability of technological and infrastructure failures; and (vii) the transnational nature of transactions involving ICOs.
Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction
Considering the lack of regulation of ICO/token sales in Argentina, no clear statistics can be provided on this field.
Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area
ICOs/token sales have a great potential in Argentina considering the already mentioned restrictions to the access to foreign exchange currencies, high rates of inflation, among other negative macroeconomic indicators. This situation represents a great opportunity for the ICO/token sale market, but the current absence of a clear legal framework discourages companies to carry out ICOs/token sales.