Republic Of San Marino Issues Decree On Blockchain For Businesses

Blockchain, News, Regulation | June 10, 2019 By:

The Republic of San Marino, a small independent country surrounded by Italian territory, has issued a delegated decree on blockchain tech for businesses.

The decree, signed by Nicola Selva and Michele Muratori, the Captains Regent of San Marino, outlines the procedures for registering a blockchain-based organization with the San Marino Innovation Institute. According to the decree, local and international blockchain-based entities that are not classified as “high risk” may apply for registration with the institute.

“The Institute shall exercise, on an exclusive basis, supervisory, regulatory and sanctioning functions vis-à-vis all interested parties and for the purposes of this Delegated Decree,” the decree said. “The Institute shall be required to issue sector-specific regulations and implementing directives addressed to the parties and for the purposes of this Delegated Decree, as well as to provide information and issue guidelines related to the sector referred to in this Delegated Decree.”

The decree stated that the issue of digital instruments by a blockchain entity will be considered as an initial token offering (ITO). The institute will monitor the functioning and application of laws that directly or indirectly affect the activities of issuers and the related trusts established in the context of ITOs, and undertake or commission sector-specific studies, research or investigations.

The decree also defined the difference between utility tokens and security tokens and their respective tax policies. The decree stated that utility tokens, which will be treated as foreign currencies, are “vouchers for the purchase of services or goods offered by the blockchain entity,” while security tokens “digital assets that represent, alternatively, depending on the underlying instrument: participating instruments… and debt securities of the issuer.” Both types of token will be exempt from standard income tax for the purpose of “income generated through operations” using the tokens.

In a statement, Sergio Mottola, President of San Marino Innovation, said that he believes that San Marino is ideally placed to become a global blockchain hub, “backed by favourable regulation and legislation that attracts and incubates innovative startups, as well as enterprise companies which wish to trial digital ledger technology, creating an environment in which their digital economy ideas can thrive.”