Regulation applicable to STOs on DESICO
DESICO aims at operating from the European Union specifically from Lithuania. Lithuania is among the few European Union member states where there is the regulation of the crowdfunding activities. Lithuania’s Law on crowdfunding sets the foundation for rules that will govern the security token offerings which will be listed on the DESICO platform. If you are seeking to raise fund on the DESICO platform, you will have to be registered in Lithuania. Below I will guide you to the key regulations which apply to security token offerings according to the crowdfunding law:
Definition of Security Token offering eligibility
Based on the Law of crowdfunding, both natural persons and legal entities are able to be project owners and parties who finance projects. Such projects must be intended to meet business, science, professional, research as well as other needs except for consumption.
Requirements for DESICO platform
Based on the Crowdfunding Law in order the platform to be in compliance with the law must have the following:
• The information on organizational as well as administrative measures must be in place in order to prevent conflict of interest.
• There must be a description of all the procedures elaborating the use of the crowdfunding platform
• Rules for secondary trading in the crowdfunding platform must be provided by the platform operator who intends to involve in secondary trading
• The method of calculating the remuneration for the operator of crowd raising platform must be paid by the project owners and investors
• Provision of the tax information which applies to financing transaction and types of such taxes
• Terms and procedures of funds repayment to investors should be elaborated in case the project owner fails to raise a sufficient amount to develop the project
• The information on risk mitigation measures should be available
• There should be proper rules for handling complaints of customers.
When the above-mentioned requirements are met, that means you as the project owner and your investors will feel protected and law abiding.
Investor protection under Law on Crowdfunding
Before you are provided an opportunity as an investor to enter into a financing transaction of any kind for the first time, the platform operator is required to carry out an assessment of appropriateness on the particular financing transaction for you. You will be requested to deliver information on your knowledge and experience in that area of investment. By using this information, the platform operator will evaluate whether the specific type of financing transaction is appropriate for you as an investor. If the assessment shows that is not appropriate the platform operator may allow you to enter the financing transaction but must:
• Warn you that the type of financing transaction is not appropriate to you, or than non-provision of the required information prevents him/her from determining whether the financing transaction is appropriate for you.
• Provide you with the information on the risks related to the investment.
Conclusion
It is very necessary for you to provide all the information to the platform operator. This adds legal certainty for fundraising business. This helps you as an investor to prevent all the risks that might lead you into losing your investments.
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