The global frenzy around cryptocurrencies has seen prices fluctuate dramatically over the past year, leading to a growing interest among Malaysian investors. The Central Bank of Malaysia (BNM) has repeatedly maintained its position that digital currencies are not legal tender in Malaysia, and has advised the public to be cautious of the risks that come with them.
What does this mean for investors and firms involved in ICOs?
ICOs come in different sizes and forms. They also offer different risk exposures to different business models across different jurisdictions and their legal systems. The rapid development of ICOs and the rapid expansion of cryptocurrency has caused concern amongst policymakers and supervisors. A key driving force for that concern is that much of the activity lies beyond the existing ‘regulatory perimeter’ and thus presently unregulated or open to market participants who may not be fully cognizant of their regulatory obligations.
Baker McKenzie recently issued this client alert, which provides an overview of ESMA’s two short ICO Warning Statements released on 13 November 2017. It discusses how the two statements fit in to the string of supervisory communications of the national supervisory authorities that make up the EU’s European System of Financial Supervision (ESFS). Finally, it considers the impact on cryptocurrency stakeholders and the future of ICOs.
More information on ESMA’s ICO warnings is available on bakermckenzie.com at this link.
The UK’s Financial Conduct Authority (FCA) published a consultation paper on 13 July 2017 proposing the introduction of a new premium listing category for commercial companies with a sovereign country shareholder who controls 30% or more of its voting rights. The new category would effect a relaxation of certain aspects of the existing premium listing rules and is widely seen as London’s competitive response to the highly-anticipated IPO of 5% of Saudi Aramco. The deadline for responses is 13 October 2017.
On March 1, 2016, amendments to the regulations on certain partnership-type funds in Japan, known as Special Exempted Business for Qualified Institutional Investors, etc. (“SEB” or Tekikaku Kikan Toushika Tou Tokurei Gyoumu), became effective. The amendments apply the Japanese suitability doctrine to previously exempt SEBs, limit target investors to sophisticated investors only and contain more onerous continuous disclosure and filing obligations, including an annual report.
Before the amendments, the SEB was a convenient option to target Japanese investors without requiring a securities business license to conduct business in Japan. Following the amendments the procedure to register the SEB is now similar to the more burdensome procedure for obtaining a financial instruments and exchange business license in Japan. The amendments also require existing SEBs to submit a new notification and attachment documents to the Japanese Financial Services Agency. As a result, existing SEBs must decide whether to abolish their business in Japan (i.e., stop marketing activities to Japanese investors and providing with investment management service to Japanese investors) or re-register under the new regulations. Many foreign fund managers previously relying on the SEB structure have chosen to abolish their business set up under the previous regulations.Read more…