for the ones who don’t know what we are doing; we are the German Start-Up that is bringing you the beer-based cryptocurrency Beercoin and I will tell you today what we needed to do prior to our ICO.
We wanted to finance our project via ICO like most cryptocurrency do. When we finished our rough framework of our Beerchain project and wanted to collect the necessary funds to set up our servers and pay our developers, one of our developers asked me if I had seen the new information published by the German financial authority Bafin. As fate would have it, the Bafin published a paper explaining their view on ICOs and the German law and after the first read I was pretty sure that we were screwed.
For the ones that do not study law, most of the time it’s a question if the cryptocurrency fulfills different types of functions. Here a couple of the most common functions described by existing German law:
- The token represents part of an investment (§ 1 Abs. 1 KAGB)
- The token is treated like a security and the ICO represents an emission (§ 1 Abs. 1 Satz 2 Nr. 10 KWG)
- The token can be used as a form of payment and is viewed as e-money (§ 1 Abs. 2 Satz 3 ZAG)
As one can see, it is surprisingly easy to fall under one of the categories defined by these pieces of legislature, since you will give your token some sort of function. Falling under one of these categories means not the end of you cryptocurrency or the ICO. German law allows you to continue, but you have to apply for a special permit called „ Erlaubnispflicht“. After a short look in the 30ish page document, that describes what is needed to apply for said permit, it dawned on me that we would lack the funds.
Since we didn’t want our dream of beer-based money to die that easy, we decided to write the Bafin and have our cryptocurrency and ICO checked by them. We wanted to know which laws apply to our Beercoin and what steps were necessary to ensure that our Beercoin can work under German jurisdiction. One could of course always move the „headquarters“ to Malta or something along those lines. (which would not be all that bad if we could also operate from there)
But as a German it would simply leave a bitter aftertaste if the beer-based cryptocurrency would not come from a beer nation like Germany.
After one and a half month we finally got our answer. While our Beercoin is viewed as e-money (since it is beer-based money), a special sub-section applies to us. If the e-money can only be used to buy a very limited variety of products, as in our case beer and beer related merchandise, it cannot be treated as e-money, but is simply a unit of account. And the usage of units of account can be done without a special permit and the ICO can procede.
To put it in more simple terms: Since our beer-based cryptocurrency is closely linked to beer we don’t need a permit.
Or to make it even simpler: beer saved us from our ICO legal troubles.
If you want to know more about our Beerchain project visit our website and spread the word that a beer-based cryptocurrency is coming!
Website: https://www.beerchain.technology
Cheers!!!