Initial Coin Offerings De Lege Lata et De Lege Ferenda, Especially in the Context of Market Efficiency
Paavolainen, Essi (2018-11-30)
Initial Coin Offerings De Lege Lata et De Lege Ferenda, Especially in the Context of Market Efficiency
Paavolainen, Essi
(30.11.2018)
Julkaisu on tekijänoikeussäännösten alainen. Teosta voi lukea ja tulostaa henkilökohtaista käyttöä varten. Käyttö kaupallisiin tarkoituksiin on kielletty.
suljettu
Julkaisun pysyvä osoite on:
https://urn.fi/URN:NBN:fi-fe2018121350710
https://urn.fi/URN:NBN:fi-fe2018121350710
Tiivistelmä
The developing of blockchain technology has enabled the emergence of ICOs (initial coin offerings), a new means for acquiring funding. Through ICOs and by utilizing blockchain, companies are able to acquire large amounts of financing from the public without the use of traditional intermediaries such as banks or crowdfunding intermediaries. During the last two years, ICOs have proven to be undeniably popular, but the regulatory treatment of ICOs in Finland is unclear, even though the ICO markets involve issues which should be addressed through regulation. The study aims to determine whether currently valid legislation is equipped to address the regulatory needs of ICOs while simultaneously ensuring the efficiency of ICO markets. De lege ferenda considerations are also presented. In addition to exploring the applicability of certain acts, the study considers whether contract law, in distinction from market law, is compatible with ICOs. The study assumes the methodology of legal dogmatics and utilizes the theories of law and economics.
The study can be divided into two parts. The first part deals with the central risks, qualities and benefits of ICOs, through which we can identify the central themes which regulation should be able to address. By examining these themes against the law and economics theories of the efficient-market hypothesis and the market of lemons we notice that the key to successful regulation is the ability to address the information asymmetry present in the ICO markets.
The second part of the thesis explores the compatibility of ICOs and the general doctrines and principles of the Securities Markets Act, the Crowdfunding Act, the Sale of Goods Act and the Consumer Protection Act in the light of disclosure obligations and the foreseeable results of applying such regulation to ICOs. We notice that the heavy disclosure obligation of securities law would effectively create a barrier to entry for companies that could benefit from ICOs the most. The Crowdfunding Act is built on the role of an intermediary, due to which the act would have no meaningful effect on the ICO markets. With regard to the Crowdfunding Act and especially the Sale of Goods Act and Consumer Protection act we see that the contract law doctrines of privity of contract and remedies based on nonconformity with contract are not able to address ICOs adequately. This is due to the fact that individual sales in the ICO markets have an effect on the whole network, and the object of sale in the ICO markets is dynamic by nature.
The study can be divided into two parts. The first part deals with the central risks, qualities and benefits of ICOs, through which we can identify the central themes which regulation should be able to address. By examining these themes against the law and economics theories of the efficient-market hypothesis and the market of lemons we notice that the key to successful regulation is the ability to address the information asymmetry present in the ICO markets.
The second part of the thesis explores the compatibility of ICOs and the general doctrines and principles of the Securities Markets Act, the Crowdfunding Act, the Sale of Goods Act and the Consumer Protection Act in the light of disclosure obligations and the foreseeable results of applying such regulation to ICOs. We notice that the heavy disclosure obligation of securities law would effectively create a barrier to entry for companies that could benefit from ICOs the most. The Crowdfunding Act is built on the role of an intermediary, due to which the act would have no meaningful effect on the ICO markets. With regard to the Crowdfunding Act and especially the Sale of Goods Act and Consumer Protection act we see that the contract law doctrines of privity of contract and remedies based on nonconformity with contract are not able to address ICOs adequately. This is due to the fact that individual sales in the ICO markets have an effect on the whole network, and the object of sale in the ICO markets is dynamic by nature.