The Governmental Decree, signed today by the Captains Regents, the two heads of state in the Republic of San Marino, outlines procedures for registering a blockchain-based organization with the San Marino Innovation Institute.
Under the decree, the allowed blockchain must originate from the Republic of San Marino, any EU member, or any country not classified as high risk.
The San Marino Innovation Institute will establish regulation for supervision and enforcement of the policy stipulated by the Decree, including initial token offerings (ITOs or ICOs). The white papers will have to be submitted to the Institute for review.
More importantly, the Decree clearly defines the difference between utility tokens and security tokens and their respective tax policies.
Utility tokens are deemed as “vouchers for the purchase of services or goods offered by the blockchain entity.” They will be treated as foreign currencies.
Security tokens are defined as “digital assets that represent, alternatively, depending on the underlying instrument: participating instruments… and debt securities of the issuer.” They will be treated as issuer’s shares, participating equity instruments, or debt securities, depending on the nature of the security token.
However, both types of tokens will be exempt from standard income tax for the purpose of income generated through operations using the tokens.