Greece -- Securities Classification Regulatory Overview

Greece, as a member state of the European Union, classifies cryptocurrency tokens as securities primarily based on the definitions laid out in existing EU financial legislation, which is transposed into national Greek law. The overarching principle is "substance over form" – meaning what matters are the rights and obligations conferred by the token, not merely its technological wrapper or name.

The regulatory landscape is dynamic, with the EU's Markets in Crypto-Assets (MiCA) Regulation (Regulation (EU) 2023/1114) setting a comprehensive framework for non-security crypto-assets. However, if a crypto token qualifies as a "financial instrument" or "security" under existing EU law, then MiCA does not apply to it; instead, traditional financial regulations like MiFID II, the Prospectus Regulation, and others come into play.

1. Legal Test Used (Howey Test Equivalent)

Greece does not employ a direct equivalent of the U.S. Howey test. Instead, the determination hinges on whether a token falls within the definition of "financial instruments" as defined by Directive 2014/65/EU on Markets in Financial Instruments (MiFID II), which has been transposed into Greek national law (e.g., Law 4514/2018).

The key categories of financial instruments under MiFID II that are relevant for crypto tokens include:

• Transferable securities: Classes of securities which are negotiable on the capital market, with the exception of instruments of payment. This is a broad category that can include shares in companies, bonds, and other forms of securitized debt or equity.
• Units in collective investment undertakings: Interests in funds managed by an asset manager.
• Options, futures, swaps, forward rate agreements, and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances, or other underlying assets, indices, or measures.

The Greek regulator, the Hellenic Capital Market Commission (HCMC), like other EU regulators, will assess the specific characteristics of a token to determine if it confers rights akin to those typically associated with traditional financial instruments. This involves looking at:

• The nature of the rights conferred: Does it represent ownership, a debt, a share in profits, voting rights, a claim on assets, or a right to convert into any of these?
• Transferability: Is it negotiable on the capital market?
• Investment expectation: Is there an expectation of a return on investment, rather than just access to a product or service?

Essentially, if a token functions like a share, bond, or fund unit, it will be treated as such.

2. Which Tokens are Considered Securities

Based on the MiFID II framework, tokens likely to be classified as securities in Greece include:

• Equity Tokens: Tokens that represent ownership interests in a company, granting rights such as voting rights, dividend payments, or a share in the company's profits or liquidation proceeds. These are treated as shares.
• Debt Tokens: Tokens that represent a debt obligation, similar to bonds or debentures. They typically entitle holders to regular interest payments and/or repayment of the principal amount.
• Fund Tokens: Tokens that represent units or shares in a collective investment undertaking (e.g., a tokenized investment fund).
• Tokens with Derivative Features: Tokens whose value is derived from an underlying asset (e.g., commodities, other securities, or indices) and are used for speculation or hedging.
• Hybrid Tokens: Tokens initially presented as "utility" tokens but which also incorporate features typical of securities (e.g., promising future profit sharing, redemption rights at a profit, or governance rights that directly influence the value of an investment). Regulators apply the "substance over form" principle strictly here.

Tokens that are generally not considered securities (and would fall under MiCA if not otherwise regulated as e-money) include:

• Pure Utility Tokens: Tokens that only grant access to a specific product or service within a platform or network, with no direct or indirect expectation of investment return or financial claim on the issuer.
• Payment Tokens / E-money Tokens: Tokens primarily intended as a means of payment and meeting the definition of "electronic money" under the E-money Directive or "e-money tokens" under MiCA. These are regulated under separate frameworks.
• Asset-Referenced Tokens (ARTs): Tokens that aim to maintain a stable value by referencing multiple fiat currencies, commodities, or other crypto-assets, but are not e-money. These are covered by MiCA.

3. Registration/Exemption Requirements for Token Issuers

If a crypto token is classified as a security, its issuance and subsequent trading are subject to the full suite of EU and Greek financial regulations:

A. Public Offering and Admission to Trading (Prospectus Regulation)

• Requirement: Issuing security tokens to the public in Greece or admitting them to trading on a regulated market requires the publication of a prospectus approved by the HCMC, in accordance with Regulation (EU) 2017/1129 (Prospectus Regulation), as transposed into Greek law. The prospectus must provide detailed information about the issuer, the security tokens, and the risks involved.
• Exemptions to Prospectus: The Prospectus Regulation provides several exemptions, including:
  • Offerings to qualified investors only.
  • Offerings to fewer than 150 natural or legal persons per Member State (who are not qualified investors).
  • Offerings with a total consideration of less than €1,000,000 over a 12-month period (Member States can raise this threshold up to €8,000,000 for offerings not passported across the EU; Greece has adopted these thresholds).
  • Offerings where the total consideration per investor is at least €100,000.
  • Small-scale offerings through a crowdfunding service provider licensed under the European Crowdfunding Service Providers (ECSP) Regulation (Regulation (EU) 2020/1503), which allows for a simplified "Key Information Sheet" instead of a full prospectus for offerings up to €5 million over 12 months.

B. Licensing for Issuance and Investment Services (MiFID II)

• Issuance Activities: Firms involved in the underwriting or placing of security tokens (e.g., acting as an intermediary for an ICO/STO) may need to be licensed as an investment firm under MiFID II by the HCMC.
• Investment Services: Any entity providing investment services related to security tokens (e.g., advice, execution of orders, portfolio management, reception and transmission of orders) must also be authorized as an investment firm by the HCMC.

4. Secondary Trading Rules

Secondary trading of security tokens in Greece falls under existing MiFID II rules, subject to specific market infrastructure requirements:

• Regulated Markets: If security tokens are admitted to trading on a regulated market (like the Athens Stock Exchange), the market operator must be authorized under MiFID II, and the issuer must comply with ongoing disclosure and transparency obligations (e.g., market abuse regulations, periodic financial reporting).
• Multilateral Trading Facilities (MTFs) / Organised Trading Facilities (OTFs): Secondary trading can also occur on MTFs or OTFs, which are alternative trading venues operated by MiFID II-authorized investment firms or market operators. These venues are subject to specific organizational, transparency, and reporting requirements.
• Over-the-Counter (OTC) Trading: Private, bilateral trading of security tokens may occur OTC, but if it involves MiFID II-regulated investment services, the involved firms must still be licensed.

DLT Pilot Regime

A significant development for secondary trading is the EU DLT Pilot Regime (Regulation (EU) 2022/858). This allows for a temporary sandbox for DLT market infrastructures (e.g., DLT multilateral trading facilities or DLT settlement systems) that want to trade and settle DLT financial instruments (which includes security tokens). It provides temporary exemptions from certain requirements under MiFID II, CSDR (Central Securities Depositories Regulation), and SFD (Settlement Finality Directive) to allow innovation, provided certain conditions and thresholds are met. Firms wishing to operate under the DLT Pilot Regime must apply for specific authorization from the HCMC.

5. Enforcement Examples

Specific, publicly detailed enforcement actions by the HCMC solely focused on unlicensed security token offerings are not widely publicized. This is common across many EU jurisdictions where the focus has been on issuing warnings and general guidance rather than punitive actions against specific "security token" projects, mainly because:

1. Many such projects are nascent or operate cross-border, making direct national enforcement challenging.
2. The HCMC, like other EU national regulators, primarily issues warnings to the public about the risks associated with unregulated crypto-assets and emphasizes that entities providing investment services or operating trading venues for security tokens must be licensed.
3. Enforcement actions typically fall under broader categories of unlicensed financial activities or market abuse if an entity is found to be operating a trading platform or offering financial instruments without the necessary authorizations under MiFID II or the Prospectus Regulation.

General Enforcement Approach:

• Public Warnings: The HCMC frequently issues warnings on its website regarding the speculative nature of crypto-assets and the risks of investing in projects lacking regulatory oversight.
• Monitoring and Supervision: The HCMC would monitor the Greek market for potential unregistered offerings or unlicensed service providers.
• Investigation and Sanctions: If an entity in Greece were to publicly issue or facilitate the trading of security tokens without adhering to Prospectus Regulation requirements or without the necessary MiFID II licenses, the HCMC would initiate investigations. Sanctions could include administrative fines, cease-and-desist orders, and potentially criminal penalties for severe breaches of financial market laws.

Specific Legislation and Regulatory Guidance URLs

EU Regulations (directly applicable in Greece):

• MiFID II (Directive 2014/65/EU):
  • https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0065
• Prospectus Regulation (Regulation (EU) 2017/1129):
  • https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32017R1129
• MiCA Regulation (Regulation (EU) 2023/1114) - for non-security crypto-assets:
  • https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1114
• ECSP Regulation (Regulation (EU) 2020/1503):
  • https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R1503
• DLT Pilot Regime (Regulation (EU) 2022/858):
  • https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32022R0858

Greek National Legislation:

• Law 4514/2018: Transposes MiFID II into Greek law. (Finding an official English translation URL might be difficult, but it's the national implementation).

Regulatory Guidance:

• Hellenic Capital Market Commission (HCMC):
  • Official Website (for general announcements and legal framework): https://www.hcmc.gr/en
  • Note: Specific guidance directly addressing crypto-assets as securities in Greece might be integrated into broader financial market guidance or be available only in Greek.
• ESMA (European Securities and Markets Authority): ESMA provides crucial guidance and Q&As that national regulators like the HCMC follow.
  • ESMA's Report on ICOs and Crypto-Assets (2019): https://www.esma.europa.eu/sites/default/files/library/esma50-157-1391_report_on_icos_and_crypto_assets.pdf
  • ESMA Q&As on the Prospectus Regulation: https://www.esma.europa.eu/policy-activities/prospectus-regulation/qas

In summary, Greece's approach to classifying crypto tokens as securities is deeply rooted in the EU's established financial regulatory framework. The "substance over form" analysis derived from MiFID II is key, with the HCMC acting as the national authority to ensure compliance with these regulations for any token deemed a financial instrument. The advent of MiCA and the DLT Pilot Regime introduces new complexities and opportunities, further shaping this evolving landscape.