On October 23, 2017, the Ontario Securities Commission (OSC) publicly announced the granting of the first OSC exemptive relief order in connection with a token offering in Canada. The order will allow TokenFunder Inc., a Toronto-based blockchain business, to sell digital tokens to raise funds to create a “smart token asset management platform” (STAMP) to facilitate third-party issuers raising capital through the offering of blockchain-based securities, including tokens and coins. The STAMP will also provide token and coin management and governance services for issuers, and is intended to facilitate token and coin transfers.
While the popularity of initial coin offerings (ICO), initial token offerings (ITO) and cryptocurrency investment vehicles has been accelerating, there have been concerns surrounding regulatory oversight and investor protection for such financings. The OSC’s exemptive relief order is a significant milestone in opening the door for ITOs and ICOs, greater innovation and growth in the Canadian FinTech sector.
DLA Piper acted for TokenFunder in securing exemptive relief through the Canadian Securities Administrators’ regulatory sandbox, which assisted TokenFunder in obtaining approval from the OSC. The team was led by Russel Drew and Sam Schwartz in Toronto and included various DLA Piper lawyers.
As one of the world's leading FinTech focused law firms, DLA Piper is at the forefront of disruptive innovation. We offer regulatory, strategic and transactional guidance and advice to banks, exchanges and providers operating at the intersection of finance and technology. Our experienced practitioners help clients around the world navigate the fast-changing legal, regulatory and policy landscapes relating to digital currencies, blockchains, trading technologies and other FinTech platforms.
For more information on regulatory guidance on token offerings, please refer to our previous client alert.