Cryptoassets, Digital currencies and Crypto-exchanges (stablecoins)
Cryptocurrencies have gained extraordinary traction over the last few years. Using the efficient blockchain/DLT technologies, cryptocurrencies, cryptoassets and tokens are used in various ways, in many business settings and for a numerous of business purposes.
Developments in the cryptospace are drastic and exponential. The regulatory front, at domestic, EU and international level, has yet to develop in a consistent, certain, and definite manner. Still, the underpinning regulatory framework demands careful examination and assessment to ensure compliance and validity of cryptocurrency use and integration to one’s business operations.
In Cyprus, following the lack of a uniform, regulatory approach at EU level, cryptocurrencies and any applicable connected activities are regulated by reference to the existing framework governing financial instruments (as defined in the relevant investment law), to the extent that these cryptocurrencies are structured as such financial instruments. This in turn triggers a nexus of applicable regimes, including inter alia, MIFID II, anti-money laundering and prospectus law. Importantly, derivatives whose underlying asset is cryptocurrencies are now explicitly regarded as financial instruments. The national strategy on DLT published by the Cyprus Government and the Parliament contemplates a comprehensive DLT legislation, which, as per said strategy, will define and govern tokens. Regulatory developments shall thus be expected on this front. Regardless, the existing framework calls for legal support to ensure compliance with potentially applicable laws.
Our team early and actively involved in the new technologies and virtual/digital currencies, closely keeping up with all market, regulatory and legal, and technology developments in the area, has the expertise to assist cryptocurrency and cryptoasset businesses implement their model with caution and legal compliance, including, cryptocurrency exchanges, wallet providers (custodial or non-custodial), crypto-crowdfunding platforms, crypto-lending platforms, crypto-payment applications, asset tokenization platforms, cryptocurrency investment companies.
Specifically, crypto-exchanges have seen considerable growth over the last few years. Our team is well-equipped to handle the establishment and proper operation of these exchanges, whether these involve crypto-to-fiat, or crypto-to-crypto exchanges. We also guide you in the trading of crypto-derivatives, in line with the latest regulatory developments in the area.
Our team has also specialized knowledge in guiding the holding of Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs), Security Token Offerings (STOs). We are the ideal counsel for DLT/blockchain projects using tokens as part of their business operations, whether they are security, utility or payment tokens, or hybrid tokens.
Our services in relation to cryptocurrencies are wide, cover all stages of business operation and include the formation and registration of vehicle carrying out the crypto business (typically, company formation), and corporate governance, management, and shareholder engagement, advice on jurisdiction, on bank account opening. We also prepare legal assessments and opinions on token classification (security, utility, payment) for internal use or use with third parties (e.g. crypto-exchanges). For businesses with tokens structured as financial instrument, or for ICOs, IEOs and STOs, we ensure compliance with connected regimes, incl. MIFID II, anti-money laundering and prospectus regulations, and where applicable we prepare a relevant Prospectus.
We have experience in preparing and reviewing token offering documentation such as whitepaper, pitch deck (depending on target investors), one-pager. We also prepare and review website papers, terms & conditions, privacy policy, intellectual property disclaimers, as well as various agreements such as employment, software, and end-user agreements, agreements with third-party service providers. We also offer our guidance on crypto-exchanges, preparing and reviewing crypto-exchanges terms. Importantly, we ensure that all relevant intellectual property is adequately protected.