Initial Coin Offerings and the Jurisdictional Challenges under European Union Procedural Law

Abstract

Initial Coin Offerings (ICOs) are relatively new means to arrange crowdfunding projects powered by distributed ledger technology. ICOs generate multidimensional questions regarding jurisdiction of national courts due to them operating fully digitally on blockchains and the uncertain status of crypto-assets. Observations of jurisdictional issues and potential solutions are made by studying Regulation Brussels I bis and MiCa Regulation and related case-law. The perspective is European Union procedural law focused.

The study results were achieved by conducting a qualitative study of which sources mainly consisted of legal documents and case-law but also benefitted from scholarly works. By utilizing systematic literature review and interdisciplinary research, it was possible to draw conclusions of the current legal state of ICOs.

As result, it was found that MiCa Regulation may ease establishing jurisdiction in courts of Member States under certain circumstances. MiCa Regulation sets obligations to all actors on crypto-asset markets, some of which require crypto-asset providers to have a registered office in the Union and to concentrate administration in the Union. The thesis also gave an insight into two special connecting factors for jurisdiction: the place of performance of a contractual obligation and consumer contracts. With respect to the place of performance, it was found justifiable that the place of performance can be the Member State from which the investor engages in the crowdfunding project and token subscription. As for consumer contracts, it was established that interpretation of consumer status remains immutable even though investors may be acquainted with ICO investments in general.