Bank of Lithuania Issues Clarification on Security Token Offerings (STOs)

Wilfred Michael 

Wilfred Michael

News reporter

23 October 2019,
15:39
Bank of Lithuania Issues Clarification on Security Token Offerings (STOs)

The Bank of Lithuania announced this week that it had issued a guideline on security token offerings (STOs) intending to provide the needed regulatory clarity as well as offer protection to investors.

In a press release published Monday, Marius Jurgilas, Member of the Board of the Bank of Lithuania, reaffirmed their knowledge of the fact that companies are adopting the STO fundraising mechanism while interest in initial coin offerings (ICOs) diminish.

Thus, the newly published guidelines provided a classification for the different kinds of tokens that companies could use to raise money, noting that some have features of securities or other financial instruments.

Aside from assessing specific use cases, the new rules, according to Jurgilas, also provide recommendations related to the issuance of security tokens and clarify applicable legal regulation.

Notably, companies that decide to conduct an STO in Lithuania will have to comply with EU and national legislation regulating capital-raising activities, while they can seek further regulatory assistance when unable to ascertain the status of their token.

The top official said in the announcement,

In case market participants are not sure whether their offered tokens are subject to regulation, we stand ready to provide them with consultation on this matter.

He also revealed that the Bank of Lithuania adopts a “technology-neutral” approach when it comes to the use of innovative models to raise capital. Such a stance, as explained in the announcement, means that the regulator would pay more attention to the features of a token used for fundraising instead of the technology powering it.

In February, Stmarket.co reported that Lithuania issued an updated guideline for ICOs, making the European country one of the first to adequately regulate the activity of crypto-related businesses.

 

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