Burkina Faso -- Securities Classification Regulatory Overview

Burkina Faso, as a member of the West African Economic and Monetary Union (UEMOA), operates under a regional financial regulatory framework rather than purely national legislation concerning financial markets and securities. The key institutions are:

• BCEAO (Central Bank of West African States): Responsible for monetary policy, financial stability, and regulating banks in the UEMOA zone.
• CREPMF (Regional Council for Public Savings and Financial Markets): The regional securities regulator for the UEMOA financial market.

It's important to note that neither Burkina Faso nor the UEMOA financial regulators have issued specific, detailed legislation or guidance that explicitly defines or classifies "cryptocurrency tokens as securities" using a test directly equivalent to the U.S. Howey Test.

Instead, their approach is to apply existing financial market laws and regulations to digital assets if those assets are deemed to fall within the established definitions of "financial instruments" or "securities." The general stance of the BCEAO and CREPMF has been one of caution and warnings regarding the risks associated with cryptocurrencies.

Legal Test Used (Howey Test Equivalent)

Since there isn't a direct "crypto-specific" test, the classification would rely on the definitions provided in the UEMOA's foundational texts for financial markets. The relevant legislation would be:

1. Regulation N°06/2018/CM/UEMOA on the Organization of the Financial Market in the UEMOA: This regulation defines what constitutes a "financial instrument" in the UEMOA zone.
2. Instruction N°01/2019/CREPMF on Public Offers of Financial Instruments: This instruction details the conditions under which an offer of financial instruments to the public requires CREPMF authorization.

The "test" is effectively whether a crypto token meets the definition of a "financial instrument" as per Regulation N°06/2018/CM/UEMOA. This regulation broadly defines financial instruments to include:

• Equity securities: Shares and assimilated securities.
• Debt securities: Bonds and assimilated securities.
• Units in collective investment undertakings.
• Other negotiable instruments conferring the right to acquire or dispose of the aforementioned securities.
• Any other instrument giving access to capital or debt.

While not explicitly stating a "common enterprise" or "expectation of profit solely from the efforts of others," the substance of these concepts is implicitly covered if a token represents:

• An investment of capital: Money is exchanged for the token.
• A right to profit or income: The token promises dividends, revenue sharing, or capital appreciation.
• Participation in an enterprise: The token represents an ownership stake or a debt claim in a project or company.
• Reliance on the issuer: The value or utility of the token depends significantly on the efforts and success of the issuing entity or project team.

Therefore, if a crypto token is structured to provide an investment return, represent an equity-like interest, or function as a debt instrument, it would likely be considered a "financial instrument" and thus a security under existing UEMOA law, rather than a mere "utility" or "payment" token.

Which Tokens Are Considered Securities

Based on the application of the above framework, tokens likely to be classified as securities are those that possess characteristics akin to traditional financial instruments:

• Investment Tokens (Security Tokens): Tokens explicitly designed to represent ownership (e.g., fractional shares in a company or real estate), debt (e.g., bonds), or units in a collective investment scheme, granting rights to dividends, interest payments, or a share of profits.
• Hybrid Tokens: "Utility tokens" that are primarily marketed or structured to generate returns for investors based on the issuer's efforts, especially during an initial coin offering (ICO) phase. If the primary motive for purchasing the token is speculative investment rather than immediate consumption of a service, it could be reclassified.
• Algorithmic Stablecoins or those promising returns: Stablecoins that offer investment returns beyond simply maintaining their peg or that are part of a complex investment scheme could be scrutinized.

Tokens generally not considered securities (unless specific circumstances dictate otherwise):

• Pure Payment Tokens (e.g., Bitcoin, Litecoin): These are generally viewed as digital assets or commodities, not legal tender within UEMOA, but typically not as securities under existing law, primarily because they don't represent a claim against a specific issuer or an investment in an enterprise managed by identifiable promoters.
• Pure Utility Tokens: Tokens that genuinely provide access to a product or service at the time of purchase and whose value is solely derived from their use within an ecosystem, without a primary emphasis on investment return or a claim on an enterprise.

Registration/Exemption Requirements for Token Issuers

If a crypto token is classified as a "financial instrument" and is subject to a public offer in Burkina Faso or any other UEMOA member state, the issuer would be required to:

1. Obtain Authorization from CREPMF: The offer would need prior authorization from the CREPMF.
2. Publish a Prospectus: A detailed prospectus, disclosing all relevant information about the issuer, the token, the project, associated risks, and the use of proceeds, must be prepared and approved by the CREPMF. This is outlined in Instruction N°01/2019/CREPMF.
3. Adhere to Ongoing Reporting: Issuers of authorized financial instruments are subject to continuous disclosure requirements and periodic reporting to the CREPMF.

Exemptions: Standard exemptions for public offers might apply, such as:

• Private placements: Offers made to a limited number of qualified investors (e.g., institutional investors) that do not constitute a "public offer."
• Offers below a certain monetary threshold: If the total value of the offer is below a specific limit set by the CREPMF, it might be exempt from certain prospectus requirements.
• Offers to a specific, limited group of persons.

However, there are no specific exemptions tailored for crypto tokens in the UEMOA framework.

Secondary Trading Rules

If a token is classified as a security and has undergone a registered public offering, its secondary trading would, in theory, fall under the existing rules for financial instruments trading in the UEMOA zone. This would mean:

• Trading on the Regional Stock Exchange (BRVM): If the security is admitted to listing.
• Over-the-Counter (OTC) Markets: Trading on authorized OTC platforms under CREPMF supervision.

In practice, however, there are currently no regulated trading venues specifically for crypto-securities in the UEMOA region. Therefore, any secondary trading of security tokens that might exist would likely occur on unregulated international platforms, outside the direct supervision of CREPMF or the BRVM.

Enforcement Examples

There are no publicly documented enforcement examples from CREPMF or BCEAO specifically targeting crypto token issuers for unregistered securities offerings.

The primary "enforcement" actions concerning cryptocurrencies in Burkina Faso and the UEMOA region have generally taken the form of:

• Public Warnings: The BCEAO has repeatedly issued press releases and circulars warning the public about the risks associated with cryptocurrencies, stating they are not legal tender, are not regulated, and carry significant risks of fraud, volatility, and money laundering.
• AML/CFT Focus: Any actual enforcement would likely originate from national Financial Intelligence Units (FIUs) like CENTIF-BF (Cellule Nationale de Traitement des Informations Financières du Burkina Faso) if cryptocurrencies are used in cases of money laundering or terrorist financing. This would fall under existing anti-money laundering and counter-terrorist financing laws, not specifically securities law.
• General Fraud: Cases of crypto-related fraud would be handled under general criminal law provisions, not specific crypto securities regulations.

The lack of specific enforcement for unregistered crypto securities offerings reflects:

1. The nascent stage of specific crypto regulation.
2. A focus on financial stability, consumer protection from scams, and AML/CFT risks over explicit securities classification for novel digital assets.
3. Potentially, a lack of significant public offerings of investment-grade crypto tokens directly targeting UEMOA investors that would trigger CREPMF's attention for a securities violation.

Specific Legislation and Regulatory Guidance URLs

It can be challenging to find direct, stable URLs for regional legislative documents online, especially in French. However, here are the official sources to consult:

• BCEAO Official Website (for press releases and warnings):

  • https://www.bceao.int/
  • Look for publications in the "Publications" or "Communiqués de presse" sections. For example, search for communiqués related to "cryptomonnaies."
  • Example Warning (General, not specific to securities): While a direct link to a specific warning about securities is hard to pin down, BCEAO has issued numerous general warnings against cryptocurrencies, emphasizing their non-legal tender status and risks.

• CREPMF Official Website (for regulations and instructions):

  • https://www.crepmf.org/

  • Navigate to "Réglementation" or "Textes Législatifs et Réglementaires" to find:

    • Règlement N°06/2018/CM/UEMOA portant organisation du marché financier régional de l’UEMOA: (Regulation N°06/2018/CM/UEMOA on the organization of the regional financial market of UEMOA).
    • Instruction N°01/2019/CREPMF relative aux offres au public d'instruments financiers: (Instruction N°01/2019/CREPMF relating to public offers of financial instruments).

  • Note: The specific documents might be embedded within larger regulatory frameworks or require searching on the site. Direct links to specific PDFs are often unstable.

• UEMOA Official Website (for general UEMOA legislative texts):

  • https://www.uemoa.int/
  • Relevant regulations would be found under "Textes et Publications" or "Législation."

Disclaimer: This information is for general informational purposes only and does not constitute legal advice. Anyone considering issuing or investing in cryptocurrency tokens in Burkina Faso or the UEMOA region should consult with legal professionals specializing in regional financial and securities law.