Law Firm specialized in Utility Tokens

The utility tokens are those fungible tokens that grant rights that can only be exercised in cyberspace or parts of it, such as digital storage on remote computers, the ability to participate in certain games, or voting rights in DAOs or other digital projects.

Utility tokens have played a key role in the financing of multiple projects related to economic crypto. Thus, on the model of Initial Public Offerings(IPOs), typical of stock markets, the famous ICOs(Initial Coin Offerings) were created, in which tokens (and not shares) associated with a given project are acquired by retail investors in exchange for the payment of a certain amount of cryptocurrencies. A smart contract is in charge of controlling the issuance, transmission and redemption of the tokens.

There is currently some legal confusion on the subject. Many believe that utility tokens are exempt from compliance with securities market regulations, but they are mistaken. Article 2.2 of the Spanish Securities Market Law states that its provisions apply not only to negotiable securities, but also to any other financial instrument. Under what conditions can a utility token be considered a financial instrument? On the other hand, the US SEC considers that some utility tokens can also be considered security tokens, in which case they are subject to its jurisdiction. As if this were not enough, in Continental Europe the new MiCA Regulation devotes one of its titles, II, to regulating the phenomenon.

Due to our extensive experience in the field, at Vicox Legal we are in full conditions to provide all kinds of advice on the issuance of utility tokens, both in private sale and public offering through exchanges(ICOs, IEOs, IDOs), even offering the integration of the same in alternative investment funds.