The French law of 22 May 2019 (known as the "PACTE law") introduced a specific regime for ICOs, providing for the principle of an optional approval/visa issued by the AMF. This new regime, designed to promote the development of ICOs, does not apply to the issuance of tokens assimilated to financial securities ("Security Token Offering"/ "STO") but exclusively to the issuance of so-called "utility tokens".
Issuers of tokens falling into the category of utility tokens have the right (but not the obligation) to apply for a visa in order to make an offer to the public of tokens. The AMF visa is not issued to a token issuer but to a token offer.
1. Main Requirements for Granting the Visa
A token issuer wishing to carry out an ICO may request a visa from the AMF, which verifies the following guarantees:
- the issuer of the tokens must be constituted as a legal entity established or registered in France;
- an information document (commonly known as a "whitepaper") is established in accordance with the requirements of the AMF General Regulation (Article 712-2);
- an escrow system to track and safeguard the assets collected in the offer is implemented by the issuer (see our article on the subject); and
- the issuer of tokens has set up a system enabling it to comply with its obligations in the fight against money laundering and terrorist financing.
2. Information document
The disclosure document must be concise and understandable. It includes all relevant information for the public on the offer and on the issuer of tokens to enable subscribers to make their investment decision and to understand the risks associated with the offer. The information it contains is accurate, clear and not misleading.
Specific headings should be included in this information document, in a pre-established order, namely a heading on:
- information on the token issuer;
- project of the issuer subject of the offering;
- rights and obligations attached to tokens offered to the public;
- risk-related factors (economical, technological and project risks);
- characteristics of the token offering;
- technical procedures for issuing tokens;
- escrow system (safeguarding and return of funds and digital assets collected as part of the token offering);
- anti-money laundering, security and subscriber knowledge mechanisms put in place;
- applicable law and competent courts; and
- certification of the persons in charge.
3. Submission and Instruction of the Draft Information Document
Issuers considering applying for a visa are invited to contact the AMF. A meeting to present the project by the project leaders may be organised at the AMF's headquarters.
The draft disclosure document is then submitted to the AMF, together with the documentation required to examine the file.
During the examination of the file, the AMF checks whether the disclosure document is complete and understandable. The AMF shall indicate, where appropriate, the amendments to be made or additional information to be inserted. The AMF may also request any explanations or justifications, in particular concerning the issuer of tokens and its project, as well as the terms and conditions of the offer.
After examining the file, the AMF decides whether to issue or refuse its visa.
Note: if the visa is optional and as such, ICOs without a visa remain legal, only offers to the public of tokens that have received an AMF visa may be sold to the public in France.
4. Publication of the Information Document and Communications
Once the visa has been obtained, the disclosure document is made available to the public by the token issuer on its website and published by the AMF.
Any change or new fact likely to have a significant influence on the investment decision of any potential subscriber and which occurs between the granting of the visa and the closing of the offer is described in an amended information document drawn up by the issuer of tokens and submitted to the AMF for approval.
The issuer of tokens is required to issue a press release informing subscribers of the outcome of the offer within 2 business days of the closing of the offer.
The issuer of tokens shall, where applicable, inform investors on its website of the organisation of a secondary market as soon as it becomes aware of it.
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Partner at DS Avocats Associate Lawyer at DS Avocats