The impact of security token offerings to the current regulatory landscape and to the financial services market

Abstract

Chapter 1 of this dissertation analyses current STO legislation. The author focuses on the approach adopted at an EU level, namely the legislation pertinent to ‘transferable securities’ whilst also focusing on Maltese law. However, albeit recognising the importance of the Central Securities Depositories Regulation, due to the limited word count, the author solely refers to such regulation in passing. Secondly, an analysis of the definition of a ‘security’ under USA and Singapore’s regulation is undertaken, since STO legislation is primarily dependent on the definition of a ‘security’. Which analysis is later referred to in Chapter 4. Chapter 2 provides an analysis of the rationale and objectives behind STO legislation. Reference is also made to the reasoning and objectives behind financial services legislation in general and their interplay within the STO context. Chapter 3 discussed the impact posed by STOs to the financial services sector, specifically to the financial market pillar, given that it will be the most impacted field of financial services. This chapter delves into the interplay between ICOs, STOs and traditional public offerings, the concept of a global public offering and the impact thereof; as well as the potential implications which the widespread use of STOs could potentially bring to the financial markets. Chapter 4 discusses the issues present in Maltese STO regulation, in order to provide a solution for such deficiencies. Focus is placed on the classification issues surrounding hybrid tokens, the regulatory concerns arising from the concept of a ‘global public offering’ as well as amendments required at the level of the Companies Act in order for such act to be rendered compatible with DLT. Due to the constant regulatory changes, the author decided to implement an informationcollection cut-off date set at 20 April 2020.