The rules on Blockchain Technology for Businesses introduce transparent, clear and simple regulation, providing specific disciplines for the different applications of Distributed Ledger Technology.

Advantages and benefits

Transparency: anti-money laundering measures for maximum protection of the system.

Concreteness: a solid and unalterable legal framework. Operators can move fluidly and in the presence of clear rules.

Regulatory certainty: a regulated ecosystem with clear and precise rules in order to attract deserving investors and achieve the transformations that blockchain technology offers to the company.

Favourable tax regime.

The Republic of San Marino has decided to use an assimilation mechanism, both from a fiscal and accounting perspective, in particular:

Usage tokens are assimilated to foreign currencies.

Investment tokens are assimilated to shares, participatory financial instruments or debt securities of the issuer.

A tax exemption is provided for IGR (General Income Tax) purposes with regard to income realized through transactions carried out with the tokens regulated in the decree.

The applications regulated by the Blockchain Regulation are currently two: usage tokens and investment tokens.

In this first phase, it was decided not to regulate the so-called cryptocurrencies (or payment tokens or payment tokens), since they currently represent a residual slice of the reference market and since this type of token cannot ignore the rules of the money market and payment services.

Recipients

Anyone involved in the issuance of usage and/or investment tokens will be able to operate and issue digital assets once they have obtained a specific recognition as a Blockchain Entity issued by the Institute.

The regulation applies to Blockchain Entities, i.e. companies or other entities with autonomous legal personality that use blockchain systems, resident:

In the Republic of San Marino.

In a member country of the European Union.

In a non-EU country that is not classified as a high-risk country and is deemed suitable by the legislation in force in the Republic of San Marino.

BLOCKCHAIN ​​TECHNOLOGY REGULATIONS FOR BUSINESSES

Definitions

a) “Blockchain”: a Distributed Register composed of blocks of validated and confirmed transactions, organized in a sequential chain to which new blocks can only be added through the use of connections based on cryptographic hash functions or equivalent technologies designed to be able to resist tampering and to provide an immutable archive of the transactions recorded therein;

b) “Professional Clients”: subjects belonging to one of the following categories:

1. subjects authorized to exercise one or more reserved activities pursuant to Title II of the LISF;
2. foreign entities that carry out, under the legislation in force in their home country, the activities carried out by the entities referred to in point 1);
3. companies issuing financial instruments listed on regulated markets;
4. companies that satisfy at least two of the following requirements:
   
   4.1. total balance sheet assets exceeding twenty million euros;
   4.2. turnover exceeding forty million euros;
   4.3. net assets exceeding two million euros;
5. States, bankscentral, international and supranational institutions;
6. natural persons who expressly request to be considered professional clients expressly accepting the lower level of heteroprotection connected to this qualification, provided that they document at least one of the following circumstances:
   
   6.1. possess liquidity and freely available financial instruments for a total amount exceeding five hundred thousand euros;
   6.2. have specific expertise in financial markets and instruments acquired through professional, teaching and operational experience of at least one year;
7. legal entities that expressly request to be considered professional clients, provided that their legal representative falls into the category referred to in point 6).

c) “Blockchain Entities”: entities with legal personality that have obtained the Recognition;
d) “Institute”: the Institute for Innovation of the Republic of San Marino S.p.A. (i.e. San Marino Innovation) referred to in Delegated Decree 7 March 2018 no. 23 and subsequent amendments; e) “Public Address”: a sequence of alphanumeric characters that represents a specific public access address within a Blockchain and to which the related tokens can be uniquely traced;
f) “ITO”: initial token offering to the public;
g) “Trust Law”: Law 1 March 2010 n. 42 “The Trust Institute” and subsequent amendments; 
h) “LISF”: Law 17 November 2005 n. 165 “Law on Banking, Financial and Insurance Companies and Services” and subsequent amendments; 
i)   “Public Offer”: any offer, invitation, or promotional message, in any form addressed to the public, aimed at the sale or subscription of investment tokens, as provided for in this delegated decree; 

An offer that presents at least one of the following characteristics does not constitute an offer to the public: 

1) addressed only to Professional Clients;
2) addressed to a number of subjects not exceeding 150;
3) of a total amount not exceeding Euro 8,000,000;
4) having a minimum denomination of Euro 100,000 per unit (i.e. single token).

l) “Prospectus”: a document containing all relevant information regarding the issuer and the investment tokens to be offered to the public or admitted to trading and, at the issuer’s discretion, the final terms of the offer;
m) “Register”: the public register of entities that use Blockchain systems held at the Institute established pursuant to Article 5 of this delegated decree;
n) “Distributed Registry”: a synchronized computerized register shared between multiple entities;
o) “Recognition”: the recognition referred to in Article 3 of this delegated decree;
p) “Office”: the Office of Control Activities of the Republic of San Marino;
“Whitepaper”: a simplified document compared to the Prospectus, containing all relevant information, as better specified in Annex B, both with regard to usage tokens and investment tokens, concerning, inter alia, the issuer and the tokens subject to the offer, the Blockchain on which they were created, as well as the essential elements thereof;
r) “Token”: a series of computer data in aggregate form and stored on Blockchain which incorporate, as the case may be: goods that are fungible with each other, services, credit rights, administrative rights, participation rights and/or any other nature, or which serve as an exchange tool and which are unambiguously attributable to a Public Address;
s)  “Investment Token”: the tokens referred to in Article 9 of this delegated decree;
t) “Usage Token”: the tokens referred to in Article 8 of this delegated decree.

Scope of application

It applies to companies or other entities with autonomous legal personality that use Blockchain systems, resident:

1. in the Republic of San Marino;
2. in a member country of the European Union;
3. in a non-EU country that is not classified as a “high risk” andbe deemed suitable in accordance with the legislation in force in the Republic of San Marino.

Recognition by the Institute

The individual in possession of the characteristics who wishes to obtain the Recognition must submit a specific application according to the methods that will be established by the Institute. 
The request for recognition must contain the information and/or documents in Annex A which, if requested, must be delivered according to the methods that will be established by the Institute. 
The Recognition will be issued by the Institute, no later than 20 working days from receipt of the relevant request, if all the requirements set out in Annex A are met, and the documentation requested therein. The Institute may request additional documents or clarifications, in which case the above term will be interrupted and will start again from the moment the integration is provided. 
The Institute, in order to carry out the necessary assessments/verifications necessary for the Recognition, may conclude outsourcing and/or mandate agreements with professionals of primary standing recognized on the Italian and international market, under its own responsibility. 
At the end of the Recognition, the Institute issues the reference code necessary for registration in the Register. 
The failure of the Institute to respond to the requesting body, after the above terms have elapsed, will be considered as a silent denial.

Supervisory, regulatory and sanctioning powers of the Institute for Innovation of the Republic of San Marino S.p.A.

The Institute exercises, exclusively, supervisory, regulatory and sanctioning functions towards all interested parties. 
The Institute has the duty to, by way of example and not limited to:

1. issue sector regulations and application directives, intended for the subjects and for the purposes referred to in this delegated decree, as well as provide information and issue guidelines related to the sector referred to in this delegated decree;
2. detect violations of the regulations and directives of referred to in the previous letter and address a formal complaint to the interested party, assigning an appropriate deadline to comply, as well as revoke the recognition, certifications and authorizations issued, in the event of failure to comply;
3. monitor and supervise the issuing entities through the establishment of the Register, as well as the related trusts established in the context of the ITOs, of this delegated decree, and keep under constant control all the practices, operations and activities carried out by the companies referred to in this delegated decree;
4. provide assistance for the process of recognition, certification, registration and issue any authorization for the exercise of activities;
5. regulate with specific regulations, directives and guidelines, intended for the subjects operating in the area of ​​competence, specific requirements, obligations and characteristics that may be necessary to protect the transparency of the system;
6. detail, through regulations, directives and guidelines to be updated periodically;
7. monitor the functioning and application of the laws that directly or indirectly influence the activity of the issuing subjects and the related trusts established in the context of the ITO, as well as undertake or commission studies, research or sector investigations that are necessary in this regard.

The Institute has the duty to equip itself with three-level control structures for management. 
In light of the support activity for the issuing entities by the Institute, the latter must establish, with a directive to be updated periodically, the tariffs (i) for the issuance of each ITO, as well as for the recognition in the territory of San Marino of a token issuance that occurred in a foreign country, (ii) for any ongoing activities requested from the Institute with regard to the ITO (or ICO converted into ITO), as well as detail the criteria for applying the tariffs. 
In the event of failure to pay the tariffs, the Blockchain Entity will notmpiente loses the right to remain in the regime with consequent automatic cancellation from the Register.

Registration in the Register

The Register is kept at the Institute. 
Registration in the Register will take place automatically within 10 working days following the obtaining of the Recognition and the transmission of the relative code by the Institute. 
The Register must be publicly available for consultation through the dedicated section on the Institute’s website and must contain the precise indication of the subjects who have obtained the Recognition.

Token recognition issued in foreign jurisdictions

Token issues carried out in foreign countries may be subject to the jurisdiction and sector regulations of the Republic of San Marino, following a specific request from the issuing entity addressed to the Institute. 
The Institute may grant recognition and registration in the Register of Blockchain entities, in the presence of the required requirements and according to the indicated procedure, including the related timing.

Initial Token Offering

An Initial Token Offering (ITO) is considered to be the issuance of digital instruments by a Blockchain Entity. 
Blockchain Entities may carry out ITOs, having as their object only the following types of tokens:

a) usage tokens; 
b) investment tokens.

In order to create any ITO having as its object one of the types of tokens, the person who has obtained registration in the Register may establish a specific trust, in San Marino or in another country, if permitted by the applicable legislation of their country of origin. The trust manages the issuance of ITOs and the relationships with investors in a unitary and separate manner with respect to the issuing entity and acts as the sole contact for the same.

Usage tokens

Usage tokens are to be classified as vouchers for the purchase of services or goods offered by the Blockchain Entity. The functionality of the usage token is limited to access to the services and/or purchase of the goods of the Blockchain Entity starting from the moment the token is issued. The same can therefore be issued only and exclusively when the service and/or the good are already available for the provision/sale at the time of issuance of the usage tokens. 
Such tokens:

1. are not valid and do not grant any rights to their holders outside of the relationships with the issuing Blockchain Entity and therefore their monetary, speculative and participatory purpose is excluded;
2. do not give the right to the reimbursement of the capital, to the payment of interest or to the distribution of profits and/or dividends and do not confer any right as a shareholder, bondholder or holder of another financial instrument such as, by way of example and not limited to, voting rights and/or other participation rights;
3. are not considered in any way transferable securities, financial instruments and/or financial products, nor electronic money and/or means of payment outside the Blockchain in which they were generated; and
4. their issuance does not require the preparation of a Prospectus.

Annex B indicates the minimum information to be indicated in the Whitepaper. 
Blockchain Entities that intend to carry out ITO of usage tokens must submit a request for the release of a specific authorization by the Institute, after submitting a technical document (Whitepaper) in which the goods and services to which the tokens give access are listed in detail.

Investment tokens

Investment tokens are digital assets that represent, alternatively, depending on the underlying instrument:

a) equity instruments of the issuer; 
b) debt securities of the issuer.

Blockchain Entities that intend to carry out ITO of investment tokens must submit a request for the release of a specific authorization by the Institute, after submitting a technical document (Whitepaper). 
Annex B indicates the minimum information to be indicated in the Whitepaper. 
Each placement and purchase or sale operation through an offer of investment tokens must be carried out after publishing a Whitepaper or, in the case of an offer to the public, a more detailed Prospectus concerning the operation, as well as  the organization, financial and management situation and the evolution of the issuer’s activity, drawn up according to the methods, including those of a general nature, that will be contained in a Regulation to be issued. In such case, the Prospectus must be approved by the Institute, within 20 days from when the Institute has completed the investigation on the documentation submitted by the Blockchain Entities. 
Except as expressly provided, the ITOs of investment tokens and investment tokens are not subject to the LISF.

Common offering rules

Blockchain Entities that intend to carry out ITOs must draft a Whitepaper:

1. which indicates the information, in case the ITO concerns, respectively, usage tokens or investment tokens;
2. which includes a statement by the administrators of the issuing Blockchain Entity regarding the compliance of the technical document. The Whitepaper must be drafted in an easily analysable and understandable form. It must contain all the information that, depending on the characteristics of the tokens issued, are necessary for investors and/or users, as the case may be, to be able to reach a well-founded opinion on the tokens themselves, as well as on the financial and equity situation, economic results and prospects of the issuing Blockchain Entity.

The advertising relating to the ITO must be clearly identifiable and the information contained therein must be accurate and not misleading. 
Blockchain Entities must also draft a summary note of the Whitepaper, which, concisely and in non-technical language, provides the key information in the language in which the Whitepaper was originally drafted. The format and content of the summary note provide, together with the Whitepaper, adequate information about the key characteristics of the tokens that help investors and/or users when evaluating whether, respectively, to invest in such products or purchase/access the underlying service. 
Blockchain Entities that intend to carry out ITO must deliver the relevant Whitepaper to the Institute 20 days before the offer, signed by the legal representative of the Blockchain Entity. 
The information must comply with that contained in the relevant Whitepaper. 
Blockchain Entities issuing tokens must:

1. conduct activities in accordance with the principles of honesty and integrity;
2. communicate with investors and/or users in a correct, clear and precise manner;
3. conduct activities with competence, prudence and diligence; and only in the case of investment token issuers:
4. identify and appropriately manage emerging conflicts of interest;
5. have an efficient organization in order to protect the funds raised from investors;
6. have an efficient administration;
7. maintain all security systems and protocols in accordance with the relevant international standards.

The Blockchain Issuing Entities are liable for damages suffered by investors/users as a consequence of the falsity of the statements made in the Whitepaper and/or advertisements, which are not attributable to other parties. 
The statements included in the Whitepaper and/or advertisements must be considered as false, due to fraud or gross negligence, if deceptive or if inaccurate or inconsistent. 
The directors of the Blockchain Issuing Entities must refrain from makingacts or operations that may conflict with the achievement of the objectives of the offer. 
The offer of tokens or admission to the exchange of tokens outside the territory of the Republic of San Marino are subject to the laws of the country in which such offer or admission is carried out. 
The Institute has the power to:

1. request the inclusion in the Whitepaper, advertisements or on the website of the issuing Blockchain Entity of additional information necessary for the protection of investors and/or users;
2. request changes to the Whitepaper, advertisements or website of the issuing Blockchain Entity in the event that deems it necessary for the protection of investors and/or users;
3. prohibit the offer or advertising relating to such offer, or suspend the offer or advertising relating to such offer, if it believes that the provisions have been violated;
4. make public the failure of the Blockchain Entity to comply with its obligations;
5. make public the measures and sanctions imposed on Blockchain Entities following the violation of one or more provisions, unless such publicity does not cause damage that is not proportional to the violation committed.

The Institute will specify, in line with national and EU legislation, the requirements that impose the publication of the Prospectus by the Blockchain Entity (as an issuer of investment tokens within an ITO), with a Regulation to be issued within 60 days of the entry into force of this delegated decree. In the event that the Blockchain Entity is required to publish a Prospectus, this will replace the Whitepaper. Therefore, any reference in this delegated decree to the “Whitepaper” shall be construed as a reference to the “Prospectus”.

Tax and accounting rules

Usage tokens are assimilated, for tax and accounting purposes only, to foreign currencies and, consequently, all transactions carried out through them are subject to the tax and accounting rules deriving from such assimilation. 
Investment tokens are assimilated, for tax and accounting purposes only, to shares of the issuer, to participating financial instruments of the issuer or to debt securities of the issuer depending on the underlying instrument and, consequently, all transactions carried out through them are subject to the tax and accounting rules deriving from such assimilation. assimilation. 
Income generated through transactions carried out with tokens is exempt from taxation for the purposes of the General Income Tax pursuant to Law 16 December 2013 n.166 and subsequent amendments.

Anti-money laundering legislation

For the purposes of preventing and combating money laundering and terrorist financing, Blockchain Entities are subject to the regulatory provisions of Law 17 June 2008 n. 92 and subsequent amendments, when they carry out ITOs involving investment tokens, with a total amount equal to or greater than €1,000.00 or similar value if issued in foreign currency.
The same anti-money laundering obligations are also fulfilled by Trustees resident in the Republic of San Marino, in the cases of Trusts eventually established, limited to Investment tokens with a total amount equal to or greater than €1,000.00 or similar value if issued in foreign currency.
The subjects are also subject to the provisions of Law 29 March 2019 n. 57 and any subsequent amendments.  
In relation to what has been established, the Financial Information Agency may issue specific binding provisions, in the form of Instructions and/or Circulars, regarding the fulfillment of the obligations of adequate customer verification according to a risk-based approach, the obligations of recording data and information, the obligations of reporting suspicious transactions, the organizational and control structures and anything else deemed necessary.  
For the same purposes of preventing and combating money laundering and terrorist financing, the Institute for Innovation of the Republic of San Marino S.p.A. and the Financial Information Agency collaborate, also through the exchange of information, by stipulating a specific Protocol of Intense.

Annex A

  LIST OF INFORMATION / DOCUMENTS  

1. company name and tax code;
2. date and place of incorporation;
3. main office and any peripheral offices;
4. corporate purpose;
5. brief description of the business carried out, including research, development and innovation activities and expenses;
6. list of members/associates, and where applicable, any third parties on whose behalf, in whose interest or under whose control the member acts;
7. list of companies participated;
8. indication of the existence of professional, collaborative or commercial relationships with institutional and professional investors, universities and research centers;
9. last balance sheet filed;
10. website;
11. type of Blockchain used;
12. in case of use of the trust: identification of the trustee and the fundamental elements of the structure that will be realized;
13. and any additional information that the Institute may request with a subsequent decree.

Annex B

INFORMATION ON THE TOKEN OFFER 
 
Warnings: 
The Blockchain Entities issuing tokens ensure that for each offer the following warning is preliminarily reported with graphic evidence on the Whitepaper and/or Prospectus page: “The Blockchain Entity issuing tokens is the sole person responsible for the truthfulness of the data and information provided by it.”

Information on risks:
Description of the specific risks relating to the issuing Blockchain Entity and the related ITO. [only for investment tokens] 

Information on the issuing Blockchain Entity and on the tokens subject to the ITO: 
(a) description of the Blockchain Entity: the description of the industrial project, the related business plan and the indication of the hyperlink to the website of the issuing Blockchain Entity where the following information can be found:

1. company name and tax code;
2. date and place of incorporation;
3. head office and any peripheral offices;
4. corporate object;
5. brief description of the activity carried out, including research, development and innovation activities and expenses;
6. website;
7. last balance sheet filed;
8. indication of the existence of professional, collaborative or commercial relationships with universities and research centers;
9. list of industrial and intellectual property rights;
10. number of employees; 
    
    and only for the issuance of investment tokens:
    
11. list of members, and where applicable, any third parties on whose behalf, in whose interest or under whose control the member acts;
12. list of participating companies;
13. indication of the existence of professional, collaborative or commercial relationships with institutional and professional investors.

With reference to the accounting information, where available, the essential data as of 31 December preceding the’start of the offer relating to turnover, gross and net operating margin, operating profit, total assets, ratio between intangible assets and total assets, net financial position. For the complete accounting information, the direct hyperlink must be expressly indicated;  (b) description of the administrative body and the curriculum vitae of the directors; [only for investment tokens] 
(d) description of the investment tokens that are the subject of the offer, and in particular, depending on the nature of the instrument: the percentage that they represent with respect to the share capital of the offeror, and/or the administrative and/or patrimonial rights connected to them and the related methods of exercise/future conversion into capital instruments. [only for investment tokens] 

Information on the offer:

1. general conditions of the offer, including the indication of the recipients, any clauses of effectiveness and revocability of membership;
2. indication of any costs or commissions charged to the investor and/or user;
3. indication of any fee, expense or charge borne by the investor and/or user in relation to the token transfer regime;
4. tax treatment of investments, with particular regard to the temporariness of the benefits and the hypotheses of forfeiture thereof; [for investment tokens only] 
5. terms and conditions for the payment and assignment/delivery of tokens;
6. information on conflicts of interest related to the offer, including those arising from relationships between the issuing Blockchain Entity, those who hold control over it, the persons who perform management, administration and control functions as well as professional investors; [only for investment tokens] 
7. information on the conduct by the issuer of offers having the same object;
8. the applicable law and the competent court;
9. the language or languages ​​in which the information relating to the offer is communicated.

Information on the supervisory body

Description of the supervisory body, where present, with the personal details of its members. [only for investment tokens] 

Information on the audit 

Description, where present, of the entity responsible for the legal audit of the accounts with the relative personal details and description of the opinions issued with reference to the last two financial years. [only for investment tokens]

Information on legal or financial advisors and expert opinions

Indication of any legal and/or financial advisors used by the issuing Blockchain Entity in relation to the offer. If an opinion attributed to a person as an expert is included in the offer document, indication of the name, address and qualification of such person and of his/her possible relevant interests in the offeror. In the case of information from third parties, confirm that such information has been faithfully reproduced and that, as far as the issuing Blockchain Entity knows or is able to ascertain, no facts have been omitted that could make the reproduced information misleading or inaccurate.

Information on any trust 

Indication of the trustee and protector (name, registered office/address, representatives, jurisdiction of affiliation), the governing law, the jurisdiction of affiliation. In the case of information from third parties, confirm that such information has been faithfully reproduced and that, as far as the issuing Blockchain Entity knows or is able to ascertain, no facts have been omitted that could make the reproduced information misleading or inaccurate.ni reproduced.

The Science and Technology Park of the Republic of San Marino, renewed in San Marino Innovation (www.sanmarinoinnovation.com), was established in order to determine favorable conditions for the birth and development of high-tech companies, with the aim of creating the best conditions for the operation and management of the company itself, depending on the characteristics and peculiarities of the individual investment sector, implementing measures have been introduced aimed at: 

1. define the requirements according to which a company can be classified as a High-tech Company;
2. introduce more favorable provisions, also in derogation of Law 23 February 2006 n. 47 and subsequent amendments;
3. introduce specific tax breaks and incentives;
4. regulate specific types of employment contracts, in derogation and in addition to Law 29 September 2005 n. 131 and subsequent amendments;
5. provide for special types of residence and stay permits for members and/or directors, as well as for those who work for the companies referred to in paragraph 1, even in derogation from Law 28 June 2010 n.118 and subsequent amendments;
6. provide for special forms of investment and risk capital collection;
7. introduce special types of licenses, even in derogation from Law 31 March 2014 n. 40 and subsequent amendments.

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