Token offerings (ICO, STO, IDO) are a popular way to raise capital, but they are associated with significant legal risks. In Georgia, as globally, the main challenge is drawing the line between "Utility" and "Security" tokens. An improperly structured offering can be considered an unregistered issuance of securities, leading to heavy fines from the National Bank. The Token Offering Compliance service ensures that your project meets all regulatory requirements, protects investor rights, and avoids legal prosecution.
What Does the Token Offering Compliance Service Cover?
This service offers full legal support during the token launch process:
- Token Legal Qualification: Analysis using the "Howey Test" and local legislation to determine if the token is a security. Preparation of a Legal Opinion for exchanges.
- Whitepaper Legal Audit: Reviewing the project description to avoid unrealistic promises and misleading information.
- SAFT (Simple Agreement for Future Tokens): Preparing pre-sale agreements with investors.
- KYC/AML Setup: Implementing investor identification systems in compliance with anti-money laundering laws.
- Marketing Material Review: Ensuring advertising campaigns comply with consumer protection and securities advertising rules.
- Jurisdictional Restrictions: Defining a list of "restricted countries" and drafting Terms of Token Sale.
Common Real-World Scenarios
This service is essential when:
- A startup plans an ICO and wants to ensure it doesn't need to approve a prospectus with the National Bank.
- A project issues a Governance token for a DAO and wants to avoid its qualification as a security.
- A company tokenizes real estate or company shares (STO) - regulations here are much stricter.
- Listing a token on a centralized exchange (CEX), and the exchange requests a Legal Opinion.
- A project conducts an Airdrop, and tax and legal risks need to be assessed.
Georgian Legislation and Regulations
Token offerings are subject to the Law of Georgia on Securities Market. If a token grants the holder the right to receive dividends, participate in company management, or profit from capital appreciation, it may be considered a security. In such cases, approval of an emission prospectus by the National Bank is mandatory. If the token is strictly "Utility" (e.g., access to a service), it is less regulated but still subject to the Law on Protection of Consumer Rights and the Law on Advertising. Also, any public offering must comply with the requirements of the Law on Facilitating the Prevention of Money Laundering (KYC/AML).
Service Process
Working with Legal.ge specialists includes:
- Concept Analysis: Studying tokenomics.
- Structuring: Selecting the optimal legal model (Utility vs Security).
- Documentation: Preparing Whitepaper, Terms of Sale, Privacy Policy.
- Legal Opinion: Issuing an official conclusion.
Why Legal.ge?
Launching a token incorrectly can be devastating for a project. The regulator can stop sales, freeze accounts, and impose fines. Legal.ge gives you access to lawyers experienced in working with both Utility and Security tokens, helping you raise capital in full compliance with the law.
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