The Italian financial services regulator, the Commissione Nazionale per le Società e la Borsa (Consob), has recently been in the news for suspending an initial coin offering (ICO) to the Italian public.

The full text of the Consob resolution (no. 20660 dated 31 October 2018) is available in Italian here.

Essentially, Consob held that the ICO satisfied the criteria for an offer of a financial investment (i.e. it involved the use of capital, an expectation of a future financial performance, and the assumption of a risk linked to the use of capital) which qualified it as a “financial product”, requiring the publication of an offer. The Consob resolution mentioned above stated:

“CONSIDERING art. 94, paragraph 1, of Legislative Decree no. 58/1998, pursuant to which “Those who intend to make an offer to the public shall publish a prospectus in advance. To this end, for offers concerning EU financial instruments in which Italy is the home Member State and for offers concerning financial products other than EU financial instruments, they shall give prior notice to Consob, attaching the prospectus intended for publication. The prospectus may not be published until it has been approved by Consob”; NOTING that in relation to the activity carried out by Togacoin LTD, no prior notification to Consob has been made and no prospectus for publication has been sent“.

Interestingly Consob has apparently considered as “use of capital” the investment of cryptocurrencies, as apparently investors in this ICO were only allowed to contribute cryptocurrencies, in exchange for the tokens.

The suspension is a urgent/interim measure, after which Consob is entitled to prohibit this offer.