Martin von Haller Groenbaek

In this specific case, the Danish FSA has considered:

• if the ICO was subject to the prospective legal regime; and
• whether the token was subject to e-money regulation.

The token offered in the ICO was intended to be used as payment on the company's online platform. The Danish FSA did not find that the token was a negotiable security as no financial or decision related rights were attached to the token. Further, the Danish FSA did not find that the token was subject to e-money regulation as that would require that the owner of the token has a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions. This was not the case as (i) payment with the token on the platform did not initiate an underlying payment and (ii) the value of the token could not be redeemed from the issuer.

The Danish FSA emphasized that investors considering purchasing tokens should always examine whether they are subject to investor protection regulation. Such protection may be governed by marketing and consumer regulation which the Danish FSA has not considered.

Importantly, the decision by Danish FSA recognized that tokens that are part of e.g. blockchain based ecommerce platforms can be issued without being considered as "traditional" securities or e-money. Whether this is the case or not, however, will depend on a close analysis of the properties and terms associated with such tokens.