The Anguilla Utility Token Offering Act (“AUTO Act”) was enacted on 8 May 2018. Utility tokens are cryptographic digital assets that act as funding mechanisms with a set of rights and should be distinguished from "security tokens" which carry a right of return.
The AUTO Act allows for the licensing and registration of two categories of service providers involved in utility token offerings, namely utility token offering administrator and utility token offering issuer.
The AUTO Act defines a utility token offering administrator ("AUTO Administrator") as a person who provides a utility token offering issuer with any of the following services:
Part 4 of the AUTO Act and the Commission’s "Procedure for making an application for a license to carry on business in or from Anguilla as a Utility Token Offering Administrator under the AUTO Act", provides guidance on the process for filing an application to be licensed as an AUTO Administrator
A Utility Token Offering Issuer ("Issuer") is a person undertaking an initial or secondary offering to the public to subscribe for the purchase of utility tokens to be issued by the Issuer made by the Issuer to any person who is not connected to the Issuer.
Part 3 of the AUTO Act sets out the requirements for the registration of an Issuer. The Commission’s "Procedure for registering an Issuer under the AUTO Act" provides further guidance on the process for filing an application to be registered as an Issuer.
An application for the registration of an Issuer must be filed through an AUTO Administrator holding the requisite licence issued by the Commission.
Prospective applicants should note that the Commission will not register an issuer to undertake a utility token offering that is intended to enable access to any of the following online businesses: gambling, pornography, trading in securities, foreign exchange contracts, binary options, contracts for differences and similar instruments, or any business prohibited by the laws of Anguilla.
The Utility Tokens Exchange Act, 2020 ("Exchange Act") allows utility token exchange operators to obtain a license from the Commission to operate a utility token exchange in or from within Anguilla. A utility token exchange is a digital market, exchange, place or facility that provides for the congregating of users to trade utility tokens for other utility tokens or money.
Only an exchange licensed under the Exchange Act is permitted to be established or operate in or from within Anguilla. Listings on an exchange will be restricted to non-securities utility tokens for which a platform is operational, unless the token is registered and issued under the AUTO Act or unless the Commission has accepted the filing of a white paper that meets the requirements of the AUTO Act.
The licensing process includes but is not limited to due diligence screenings of the principals of the exchange and a review of the exchange’s business plan, systems and operating procedures for the purpose of evaluating the exchange’s ability to manage its operations and monitor all trading activity conducted on its trading platform to identify and address market abusers, and to ensure an orderly and fair market.
The regulatory framework also includes sector specific Anti-Money Laundering and Terrorist Financing Regulations which provides clarity on some anti-money laundering and terrorist financing requirements. However, exchanges licensed under the Exchange Act are subject to the AML/CFT obligations under the Proceeds of Crime Act, R.S.A. c. P98 in keeping with the recent amendments to the Financial Action Task Force Recommendation 15 on virtual assets and related providers.