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Fintech Market Overview

This article does not constitute legal advice.

Virtual currencies in Austria

Fintech Software

Slightly different from cryptocurrencies like Bitcoin and Ether, tokens can also take the form of payment tokens that have a similar function to Bitcoin and Ether but are issued by an entity or person.1

Currently, some market participants are trying to establish stablecoins that are effectively mirroring a fiat currency such as the euro. These coins could, for example, be used to pay for goods and services – if the service provider was willing to accept such coins and if some other person was willing to exchange such coins either against fiat currency or potentially also other types of cryptoassets. Depending on the exact features, such payment tokens could qualify as e-money and issuing such payment tokens may require a licence as an e-money institute. A licence under the Banking Act or the Payment Services Act may also be required; for example, for issuing payment instruments or for providing payment services. There are exemptions from licensing requirements available that would need to be scrutinised on a case-by-case basis.1

If tokens are structured as tradeable securities, they are most commonly referred to as security tokens and may be qualified as financial instruments and transferable securities, provided such security tokens are freely tradeable in a similar way to securities (presumably the case with any ERC-20 token). Hence, the public offer of such tokens may be subject to prospectus requirements. However, there is also a significant advantage for issuers when tokens are considered as securities, as they will be able to benefit from prospectus passporting rules that would otherwise not be available for ICOs or ITOs. On the other hand, such qualification might adversely impact certain business models of fintech companies. For example, trading in security tokens may require a banking licence in Austria, advising customers on investments in security tokens might be considered as investment advice under MiFID II, and accepting and transmitting orders for security tokens may also be regulated under the Austrian Securities Supervision Act 2018.1

All exemptions from prospectus requirement and the easements contained in the AFA should also apply to security tokens and ICOs/ITOs.1

Utility tokens are usually structured like vouchers and grant holders the right to exchange their tokens against goods or services (of the issuer or service partners). These tokens are qualified as payment instruments by the FMA. However, the FMA considers the limited network exemption under PSD II to be applicable, provided that the tokens are only accepted by the issuer of the tokens and a limited number of service partners. Otherwise, a licence under the Payment Services Act, implementing PSD II, may be required.1

Decentralised exchanges allow for peer-to-peer transactions between customers without the operator or a central counterparty or intermediary being involved. To the extent that the decentralised exchange facilitates the trading of securities and security tokens, a licence under the Austrian Banking Act or the Securities Supervision Act 2018 may be required.1

Digital assets in Austria

Fintech in Austria

Fintech in other countries

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Austrian Fintech Lawyers

Kristina Berkes

Kristina Berkes

Participation as a lawyer at investment venture funds, leading venture M&A deals in IT, supporting iGaming and business assets

Denis Polyakov

Denis Polyakov

Comprehensive legal services for businesses on corporate, tax law, cryptocurrency legislation, investment activities

Viacheslav Losev

Viacheslav Losev

Legal support for FinTech and Blockchain projects

Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/austria
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