Costa Rica -- Securities Classification Regulatory Overview

Costa Rica currently does not have a comprehensive, specific legal framework dedicated solely to the classification and regulation of cryptocurrency tokens. Instead, the country's financial regulators apply existing securities and financial market laws, principles, and interpretations to determine whether a particular crypto asset qualifies as a security. This approach relies heavily on a "substance over form" analysis.

Legal Test Used (Howey Test Equivalent)

Costa Rica's equivalent to the Howey Test is derived from the Ley Reguladora del Mercado de Valores (Securities Market Regulatory Law - Law 7732) and the regulations issued by the Superintendencia General de Valores (SUGEVAL), the national securities regulator.

While not explicitly called the "Howey Test," the core principles are very similar, focusing on whether an instrument constitutes an "investment contract" or a "public offering of securities." Key elements that SUGEVAL would likely consider when evaluating a cryptocurrency token for security classification include:

1. Investment of Money or Assets: Has there been an investment of economic value?
2. Expectation of Profits: Do purchasers have an expectation of generating a return or profit from their investment? This is often the most critical subjective element.
3. From the Efforts of Others: Are these profits expected to be derived predominantly from the entrepreneurial or managerial efforts of the issuer or a third party (e.g., the development team, foundation, or specific individuals promoting the project)?
4. Common Enterprise: Is there a common enterprise or collective investment scheme, where investors pool their resources for a common objective?

If a crypto token offering meets these criteria, it is likely to be considered an "oferta pública de valores" (public offering of securities) and the tokens themselves as "valores" (securities) under Costa Rican law.

Which Tokens Are Considered Securities

Based on the above test, the classification depends heavily on the structure, marketing, and underlying rights/expectations associated with the token:

• Security Tokens (STOs/ICOs structured as investments): These are almost certainly considered securities. If a token represents equity, debt, a right to profit-sharing, or a share in the project's future revenue, it would fall under SUGEVAL's jurisdiction.
• Utility Tokens (with investment characteristics): This is a grey area. While marketed for accessing a product or service, if they are sold with an explicit or implicit promise of future value appreciation based on the issuer's efforts, or if they are purchased primarily for speculative investment rather than immediate utility, they could be deemed securities. The timing of utility (immediate vs. future promise) and marketing materials are crucial here.
• NFTs (Non-Fungible Tokens) (potentially): While many NFTs are purely collectibles, if they are fractionalized, or if their sale is packaged as an investment in a collective asset with an expectation of profit generated by a third party's efforts (e.g., an NFT art fund), they could be classified as securities.
• Stablecoins (less likely, but possible): Purely fiat-backed stablecoins used for payments are generally not seen as securities. However, if a stablecoin offering includes features like interest accrual or yield generation based on active management of underlying assets by the issuer, it could potentially cross into security territory, especially if marketed as an investment product.
• Payment Tokens (e.g., Bitcoin, Ethereum): Generally, widely distributed and decentralized cryptocurrencies like Bitcoin and Ethereum are unlikely to be classified as securities by SUGEVAL, as they typically do not involve a "common enterprise" or profits derived from a specific issuer's managerial efforts in the same way an ICO token does. The Central Bank of Costa Rica (BCCR) has clarified they are not legal tender.

Registration/Exemption Requirements for Token Issuers

If a crypto token is classified as a security and offered to the public in Costa Rica, the issuer must comply with the Ley Reguladora del Mercado de Valores (Law 7732) and SUGEVAL regulations.

1. Public Offering Registration:

   • Issuers must register the offering and the tokens themselves with SUGEVAL.
   • This requires submitting a detailed prospectus, financial statements, legal opinions, and disclosing all material information about the issuer, the project, and the tokens.
   • Compliance involves significant costs, time, and ongoing reporting obligations.

2. Exemptions:

   • Private Placement: The most common exemption for startups or smaller offerings. Offers made to a limited number of qualified investors (e.g., institutional investors, sophisticated individuals) or under specific conditions that do not constitute a "public offering" might be exempt from full registration. The exact criteria are defined in Law 7732 and subsequent regulations, often involving restrictions on advertising and the number of offerees/purchasers.
   • Other specific exemptions: Law 7732 also outlines other limited exemptions, such as offers to specific types of financial institutions or small-scale offerings below a certain monetary threshold (though these are often strictly defined).

Given the rigorous requirements for a full public offering, most crypto projects classified as securities would likely aim for a private placement exemption or choose to operate offshore.

Secondary Trading Rules

If a token is classified as a security:

• Registered Securities: Secondary trading of registered securities must occur through authorized stock exchanges (e.g., Bolsa Nacional de Valores - BNV) or licensed brokers regulated by SUGEVAL.
• Unregistered/Exempt Securities: Tokens initially offered under an exemption (e.g., private placement) are subject to transfer restrictions. They typically cannot be freely traded in the public market for a certain period, and subsequent sales may only be permissible to other qualified investors or through specific channels that maintain the private placement nature.
• Unlicensed Platforms: Any platform facilitating the secondary trading of securities without proper authorization from SUGEVAL would be operating illegally.

The current lack of regulated crypto exchanges in Costa Rica means that secondary trading of tokens deemed securities would face significant legal hurdles and limited avenues for compliance.

Enforcement Examples

As of late 2023 / early 2024, there haven't been widely publicized, direct enforcement actions specifically targeting cryptocurrency token issuers for unregistered securities offerings in Costa Rica in the same vein as SEC actions in the US.

However, SUGEVAL and the BCCR have issued warnings and advisories regarding the risks associated with investing in unregulated crypto assets and platforms. These warnings serve as a form of indirect enforcement and clear guidance that:

• Cryptocurrencies are not legal tender in Costa Rica.
• Platforms offering crypto investments are not regulated by SUGEVAL or SUGEF (the banking regulator) unless they fall under existing financial laws (e.g., if they are structured as investment funds or security offerings).
• Investors are exposed to high risks (volatility, fraud, lack of investor protection) when dealing with unregulated crypto entities.

The absence of direct enforcement for unregistered crypto securities can be attributed to several factors:

• The nascent nature of the crypto market in CR.
• Many projects might choose to structure themselves to fall outside the current securities framework or operate from offshore jurisdictions.
• Regulators often prefer to issue warnings and develop new legislation before launching full-scale enforcement actions in complex, evolving areas.

The pending Proyecto de Ley para Regular las Actividades de Finanzas Descentralizadas (Fintech Law Bill 23.033), currently under legislative review, aims to establish a dedicated regulatory framework for various fintech activities, including potentially certain crypto assets. This bill, if passed, would provide clearer definitions and regulatory pathways, likely leading to more specific enforcement in the future.

Specific Legislation and Regulatory Guidance URLs

• Ley Reguladora del Mercado de Valores (Law 7732): The primary legislation governing securities in Costa Rica.

  • Official link (usually through the Legislative Assembly's repository):
    • Search for "Ley Reguladora del Mercado de Valores, Ley 7732" on the Costa Rican Legislative Assembly's website or official legal databases.
    • A common public repository for CR laws is pgrweb.pgr.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=28243&nValor3=33475&strTipM=TC (Note: This specific URL may change, always verify with official sources).

• Superintendencia General de Valores (SUGEVAL) - Official Website: Provides information on registered entities, regulations, and investor warnings.

  • https://www.sugeval.fi.cr/
  • Look for "Alertas al Inversionista" or "Comunicados de Prensa" for warnings related to unregulated investments.

• Banco Central de Costa Rica (BCCR) - Official Website: Has issued statements regarding the status of cryptocurrencies as legal tender.

  • https://www.bccr.fi.cr/
  • Search for publications or press releases related to "criptoactivos" or "monedas virtuales."

• Proyecto de Ley para Regular las Actividades de Finanzas Descentralizadas (Fintech Bill 23.033): While not yet law, it represents the ongoing legislative effort.

  • Official link through the Legislative Assembly's website: Search for "Expediente 23033" on https://www.asamblea.go.cr/

It is crucial for any entity considering issuing or trading cryptocurrency tokens in Costa Rica to seek independent legal advice due to the evolving regulatory landscape and the reliance on interpretation of existing laws.