Important Note: The issuance, intermediation, and placement of crypto securities are subject to a complex regulatory framework. As a technical platform, ecrop provides the infrastructure for issuing and managing crypto securities but does not engage in investment intermediation or investment advice. Issuers who issue crypto securities through the ecrop platform have various distribution channels available.

The responsibility for compliance with respective legal requirements, particularly prospectus obligations and investor protection regulations, lies with the issuer or their appointed partners.

We strongly recommend issuers to seek advice from an experienced legal counsel.

In this section, we provide an overview of the most important laws and regulations relevant to crypto securities issuers. We do not provide legal advice.

The following placement options are available to you:

  • Direct Placement: You place your crypto securities directly to selected investors, e.g., through private placement. This option provides maximum control over the distribution process. However, you are responsible for all processing and compliance with all relevant legal requirements, particularly regarding:

    • Prospectus Requirement (Prospectus Regulation and WpPG): A public securities offering typically requires publishing a prospectus containing comprehensive information about the securities and issuer. The prospectus requirement follows Prospectus Regulation (EU) 2017/1129 and the Securities Prospectus Act (WpPG). The prospectus must be approved by BaFin before publication. The prospectus requirement may be waived under certain conditions, e.g., for offerings to qualified investors or emissions below certain thresholds.

      Link to Prospectus Regulation

      Link to WpPG

    • Securities Trading Act (WpHG): The WpHG regulates financial instruments trading in Germany and contains important provisions on insider trading, market manipulation, and disclosure requirements. Although ecrop does not engage in trading activities, issuers using the ecrop platform to issue crypto securities are responsible for compliance with relevant WpHG provisions, particularly regarding future tradability and ad-hoc disclosure obligations.

      Link to WpHG

    • Markets in Financial Instruments Directive II (MiFID II) - if applicable: MiFID II regulates investment advice and intermediation requirements in the European Economic Area. As ecrop does not directly offer these services, it does not fall directly under MiFID II. However, issuers working with external intermediaries are responsible for ensuring they meet MiFID II requirements, particularly regarding financial instrument suitability and cost transparency.

      Link to MiFID II

    • Market Abuse Regulation (MAR): MAR regulates insider information handling and prohibits market manipulation. Crypto securities issuers must observe MAR provisions and implement appropriate measures to prevent insider trading and market manipulation. This includes publishing insider information and maintaining insider lists.

      Link to MAR

    • Additional Legal Aspects: Consider other relevant laws and regulations, e.g., data protection (GDPR, BDSG) and anti-money laundering (GwG).

      Link to GDPR

      Link to BDSG

      Link to GwG

      Example: A company places a digital bond as a crypto security directly to institutional investors. The company prepares a prospectus according to legal requirements and handles all communication and processing with investors.

  • Cooperation with Intermediaries: You can engage a licensed financial services institution to intermediate your crypto securities. The intermediary handles communication with potential investors, advises them within legal framework, and processes subscriptions. The intermediary is responsible for compliance with all relevant legal requirements, particularly MiFID II, MAR, and WpPG requirements. It must be ensured that the intermediary has required permissions and implements necessary compliance measures.

    • Advantages: Relief from administrative tasks, access to larger investor base, professional investor advice.

    • Disadvantages: Intermediation fees, less control over distribution process.

    Example: An issuer engages a bank to place their crypto securities. The bank reviews emission documentation, creates marketing materials, and offers securities to its clients. The bank also handles subscription processing and ensures compliance with all legal requirements.

  • Equity Crowdinvestment: Use equity crowdfunding platforms to place your crypto securities to a broad investor base. This option allows you to reach smaller investors. The platform is responsible for compliance with relevant legal requirements, particularly regarding prospectus requirements under Regulation (EU) 2017/1129 and WpPG, compliance with VermAnIG provisions, and investor protection regulations. It must be ensured that the platform has required permissions and implements necessary compliance measures.

    • Advantages: Access to broad investor base, quick and easy capital raising, high financing process transparency.

    • Disadvantages: Platform fees

    Example: A startup issues a subordinated loan as a crypto security through an equity crowdinvestment platform to raise seed capital. The platform reviews emission documentation, creates a presentation page for the startup, and markets the crypto securities to registered investors. The platform also handles subscription processing and ensures compliance with all legal requirements.

  • Secondary Market (future): ecrop is working to establish technical and legal requirements for listing crypto securities on regulated exchanges. Once possible, issuers can also trade their crypto securities through exchanges, benefiting from increased liquidity and larger investor base.

Legal requirements for crypto securities issuance and transfer are complex. ecrop does not provide legal advice. We strongly recommend consulting an experienced legal counsel to support you in complying with all relevant regulations and preparing necessary documents.

We are happy to connect you with experienced legal counsel with whom we have successfully worked.

info@ecrop.de

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