Native cryptocurrencies and protocol tokens (commonly both referred to as ‘tokens’) have progressed greatly since the original inception of bitcoin. Myriad uses and variations have been developed, with such tokens granting rights that range from mere utility to complex revenue sharing models. While the so-called pure ‘utility tokens’ are capable of being listed with no issues on most exchanges and service providers operating across various jurisdictions, more complex tokens necessitate an in-depth analysis to ensure that they do not classify as some form of regulated instruments such as transferable securities of electronic money, as otherwise a specific set of regulations would apply, potentially with ramifications such as the need by the listing service provider to obtain a specific separate licence to be able to list such tokens. Hence, service providers operating in regulated jurisdictions are often well-advised, if not outright obliged, to obtain legal opinions on any tokens prior to listing on their platforms.
The ‘legal’ aspect of a legal opinion is only part of the document in its entirety. In order for a legal opinion to be as accurate and as faithful to the underlying token as possible, a thorough analysis of the token itself from a technical perspective, including a study of the accompanying whitepaper and all other relevant documentation and media, is crucial. The legal analysis cannot exist in a vacuum, as certain technical matters such as the innate ability of the token to be swapped or converted into another token type would have an important bearing on the legal classification of the token itself.
It is for this reason that BCAS has adopted a comprehensive approach to executing and delivering legal opinions, by undertaking a two-stage process whereby its inhouse technical team analyses all relevant documentation pertaining to a token or project, and then coordinates with the legal team to deliver a comprehensive report that includes the technical analysis along with the legal opinion itself which gives a final classification of the token according to the applicable laws of the jurisdiction in which the legal opinion is sought.
Thanks to the meticulous approach undertaken by BCAS in the preparation of token legal opinions, the requesting client is given full peace of mind that the classification is factually and conceptually accurate, and that all the risk in relation to the analysis of the token itself is borne by BCAS. Moreover, due to BCAS’ international presence, the adaptation of a legal opinion for other jurisdictions is also possible, ensuring that token teams can apply for listing on exchanges based across various prominent countries. That, along with the rapid turnaround time offered by BCAS while retaining the highest quality standards, ensures that service providers and token teams alike receive the all-important legal opinion in the best way possible.