Fintech Law Module A Chapter 5

Question 1

Name the 3 different types of cryptoassets

Answer 1

1. Exchange tokes
2. Security tokes
3. Utility tokes

Question 2

Name the 3 synonyms for the different types of cryptoassest

Answer 2

1. Payment tokens
2. Financial tokes
3. Consumer tokes

Question 3

When can cryptoassest be regarded as property? Name 6 components.

Answer 3

1. If it is capable in its nature of assumption by third parties,
2. If it is definable, identifiable,
3. If it has a degree of performance or stability
4. If it has certainty
5. if it has control
6. if it is assignable

Question 4

Following the cryproassets Taskforce report, explain 6 different types of risks associated with cryptoassets.

Answer 4

1. Consumers may suffer unexpected losses without regulatory protection
2. Consumers may invest in products that are poor value due to unclear price formulation and pricing practices, high fees and difficulty in assessing fundamental value.
3. Some consumers may lack understanding of cryptoassets and their volatility, risks and lack of regulatory protection.
4. Advertising regarding cryptoassets can be misleading and unclear.
5. Market abuse styles.
6. Cyber crime.

Question 5

Does existing regulation apply to cryptoassets?

Answer 5

That depends on the nature of the assets. Broadly - the existing securities regime will apply to securities tokes (financial tokens).

Question 6

Following the Norton rose paper, how are ICO’s launced?

Answer 6

1. Launch a white paper, including a description of the project itself, the DLT, Protocols and rules in general.
2. Announce the project to the public without an intermediary, for example via social media.
3. The issues tokes can be traded on an exchange platform.

Question 7

What is an ICO?

Answer 7

Initial coin offering

Question 8

What is the difference between IPO (initial public offering) and ICO (initial coin offering)

Answer 8

In an ICO, investors are offered the opportunity to purchase tokens.

Question 9

What do ICO’s do?

Answer 9

Raise capital for projects of companies, developers of entrepreneurs in exchange for digital tokens that may present a payment for a good or service, security or commoditiy, depending on the nature of the ICO’s structure and the participant’s activities.