To what extent are tokens and virtual assets in use in your jurisdiction? Please mention any key initiatives concerning the use of tokens and virtual assets in your jurisdiction.


Australia Small Flag Australia

While there are no specific initiatives concerning the use of tokens and virtual assets in Australia, both ASIC and AUSTRAC have established innovation hubs to assist fintech businesses in understanding their legal obligations and requirements (see section 5).

Beyond these Innovation Hubs and the fintech licensing exemption, ASIC has engaged with regulators overseas to deepen its understanding on innovation in financial services, including in relation to cryptocurrencies. In particular, ASIC and the United Kingdom’s Financial Conduct Authority have signed an Enhanced Cooperation Agreement, which allows the two regulators to, among other things, information-share, refer innovative businesses to each regulator’s respective regulatory sandbox, and conduct joint policy work. ASIC currently has such information-sharing or cooperation agreements with regulators in Hong Kong, Singapore, Canada, Kenya and Indonesia. These arrangements facilitate the cross-sharing of information on fintech market trends, encourage referrals of fintech companies and share insights from proofs of concepts and innovation competitions.

Other international initiatives include ASIC’s commitment to supporting financial innovation in the interests of consumers by joining the Global Financial Innovation Network (GFIN), which was formally launched in January 2019 by a group of financial regulators across 29 member organisations. The GFIN is dedicated to facilitating regulatory collaboration in a cross-border context and provides more efficient means for innovative businesses to interact with regulators.

In 2019, a group of fintech associations formed the Asia-Pacific FinTech Network, which is designed to facilitate greater collaboration, cooperation and innovation across the region. The network will focus on sectors including RegTech, Blockchain, Payment Systems, Artificial Intelligence and Financial Inclusion and is expected to accelerate fintech development and lower financial costs both domestically and internationally.

ASIC is also a signatory to the IOSCO Multilateral Memorandum of Understanding, which has committed over 100 regulators to mutually assist and cooperate with each other, particularly in relation to the enforcement of securities laws.

France Small Flag France

Following the launch of the UNICORN project (designed to encourage the development of ICOs in France), the AMF initiated in 2018 a public consultation on ICOs to gather the views of market participants and stakeholders, notably in view of the preparation of an appropriate regulatory framework. The findings of such consultation, published in November 2018, revealed that 15 ICOs were launched in France, for a total amount of €89M – in a range of sectors (including : technology, health care, energy and retail). 89% of such ICOs were related to utility tokens.

Germany Small Flag Germany

The use of token in Germany is not widely spread yet, which might be due to the lack of a legislative and regulatory framework. Nonetheless, the BaFin published a paper to support potential issuers of crypto token on which information needs to be delivered to the BaFin when it comes to obligations regarding the publication of a prospectus or permission requirements (e.g. White Paper/General Terms and Conditions/ Agreements etc.).

A key initiative regarding the use of token is the Security Token Offering, (“STO”), by the German Bitbond GmbH in cooperation with solarisBank. The Bitbond STO, which has been opened in March 2019 raised over EUR 2.1 mio. Bitbond is the first company that was approved by the BaFin to issue tokenised bonds. To our knowledge, there is no information available regarding the use of virtual assets or any key initiatives concerning the use of virtual assets.

Ireland Small Flag Ireland

At the time of writing, the tokenization of traditional assets is not common practice in Ireland. However, there are a number of initiatives that are looking at this for particular categories of assets. For example, the Aviation Working Group (AWG), a not-for-profit group in the aviation finance and leasing industry, has specifically provided for the possibility that the Global Aircraft Trading System (GATS) platform, which is being developed in Ireland by Fexco to facilitate the trading and financing of aircraft equipment, may migrate to a private blockchain.

Italy Small Flag Italy

No significant public initiatives have been introduced in Italy concerning the use of tokens and virtual assets. However, many private entities are developing platforms and exchange websites to enable crypto-asset circulation. It thus appears likely that the use – and exchange – of tokens and virtual assets will dramatically increase in the near future, particularly given the regulators’ initiatives mentioned above.

Japan Small Flag Japan

As we noted under Q12, the trading of Crypto Assets on Exchange Providers is now prevalent in Japan.

Additionally, games that employ blockchain technology (“Blockchain Games”) are gaining in popularity in Japan. Typically, in a Blockchain Game, a business operator will issue game characters or game items as non-fungible tokens (“NFT”) on a blockchain, and give such characters or items unique characteristics or make them transferable on the blockchain. In such cases, the issue arises as to whether such game characters or items constitute Type II Crypto Assets under the PSA, because such characters or items are mutually exchangeable with Type I Crypto Assets (e.g., Bitcoin or Ether) among unspecified persons on the blockchain.

Based on the FSA’s public comments published on September 3, 2019 (“Public Comments”) , it is generally understood that the FSA has adopted the view that whether an NFT constitutes a Crypto Asset should be determined on a case-by-case basis. At the same time, however, the Public Comments also suggest that the FSA has adopted the view that even if trading cards or game items issued as tokens recorded on the blockchain are mutually exchangeable with Type I Crypto Assets (e.g., Bitcoin or Ether), they do not constitute Type II Crypto Assets because they serve no payment functions, unlike Type I Crypto Assets. Given such regulatory clarification, it is unlikely that Blockchain game items that does not used as a means of payment would be unlikely to be considered as Crypto Assets.

Liechtenstein Small Flag Liechtenstein

There are several projects that are being conducted out of Liechtenstein that include tokenization of physical assets. One notable example of this includes tokenization of a right to precious metals.

The Netherlands Small Flag The Netherlands

All types of companies – from start-ups to incumbents – in most sectors are working on business cases involving tokens and virtual assets. Examples in the private sector include:

- Funding: we have recently seen the first STOs "go live" in the Netherlands.
- International settlement: several Dutch banks have joined forces with other global banks to create a digital coin -- a "utility settlement coin" – that can be used to settle international money transfers instantly, thereby cutting out intermediaries and lowering transaction costs.
- News: timestamping website content.
- Music industry: distribution of concert tickets via blockchain to combat fraud and ensure fair prices for fans.
- Real estate: the trade of real estate bonds via a blockchain-based platform.

Russia Small Flag Russia

After adoption of the law “On Fundraising Through Investment Platforms” the representatives of different business circles declared their readiness to use tokens in their business. For example, in October 2019 the CEO of a large Russian nickel company “Nornickel” announced that the company was planning an issue of stable coins secured by its own metals.

Anyway, lawful and binding transaction involving tokens and other virtual assets will become available in Russia after the adoption of the law “On digital financial assets”. Of course, a lot of limitations will be applicable to these transactions, as this position was several times expressed by Russian officials.

South Korea Small Flag South Korea

Tokens and virtual assets are primarily used for payment, utility, and investment in Korea. As explained above, major financial institutions have already launched projects to adopt tokens/virtual assets for their payment systems.

Sweden Small Flag Sweden

According to the SFSA, there are transactions in Sweden involving virtual assets, although virtual currencies are not considered common method of payment in Sweden. There are also established businesses in Sweden dealing with virtual currencies mining and businesses that offer trading venues for virtual currencies and tokens.

Switzerland Small Flag Switzerland

There have been numerous token issuances launched out of Switzerland and key blockchain initiatives, such as the Ethereum foundation, are based in the Swiss crypto valley. However, the use of digital assets is still in a relatively early phase, with more widespread adoption likely depending on the further development of the legal framework and the availability of reliable Swiss financial infrastructure geared towards digital assets. 2019 saw two new challenger banks being granted full Swiss banking and securities dealer licences by the Swiss Financial Market Supervisory Authority FINMA, and a fully integrated digital exchange project is in the works under the leadership of the SIX, the operator of the main Swiss stock exchange. Furthermore, it should be noted that Facebook has chosen Switzerland as the main domicile for its Libra project, which aims at launching a global permissioned blockchain-based digital currency backed by a basket of fiat currencies. The project that has attracted worldwide attention by governments and regulators.

Uganda Small Flag Uganda

Use of tokens and virtual assets is still nascent. Virtual assets such as Binusu are only growing at the moment and are not yet truly ubiquitous in their use.

United Kingdom Small Flag United Kingdom

As discussed at question 2 above, many blockchain-based projects are still in their infancy, however, some notable projects such as Fnality make use of tokens or virtual assets.

Another notable initiative in the UK is the work currently being undertaken by Her Majesty’s Land Registry (“HMLR”). HMLR has been looking at the possibility of tokenising UK real estate on a blockchain to reduce friction in real estate transactions. In April 2019, HMLR demonstrated an end-to-end proof of concept real estate transaction using blockchain technology and smart contracts that took less than 10 minutes to complete.

United States Small Flag United States

ICOs, also referred to as token sales, predominated the use in this area. These have mainly concerned utility tokens but the tokenization of assets is also budding, allowing for either a fractional ownership of the tangible asset in the shape of a token or the pegging of a cryptocurrency to some secondary source to minimize volatility. Tokenized assets is overall gaining traction in the US, ranging from real estate to collateralized stablecoins.

Singapore Small Flag Singapore

Apart from the initiatives mentioned above in the response to question 2 above, recently in 2019, a food court operator in Singapore has offered to accept as payment for meals purchased, cryptocurrencies such as Bitcoin and Ether. We have seen merger and acquisition transactions as well as equity investments where the purchase consideration was settled in digital tokens, as well as secured financing transactions with security packages that included digital tokens.

Hong Kong Small Flag Hong Kong

As noted in the response to questions 4 above, the Hong Kong Government and the key Hong Kong regulators have launched various initiatives aimed at promoting the use of blockchain and DLT.

As noted in the response to question 2 above, there have also been a number of notable successful applications of these technologies in the private sphere, including in the token / digital asset space – a good example being the launch in March 2019 by the Chinese Gold & Silver Exchange (CGSE), Hong Kong’s sole physical gold and silver exchange, of a new digital gold certificate trading platform, GoldZip, backed by physical gold reserves.

Updated: November 12, 2019