Journal of Legal Research

Journal of Legal Research

The Approach of the Iranian Legal System and the European Union Toward Utility Tokens

Document Type : Original Article

Authors
1 PhD in Criminal Law and Criminology, Faculty of Theology and Islamic Studies, Meybod University, Yazd, Iran.
2 PhD in Criminal Law and Criminology, Faculty of Law, Shahid Beheshti University, Tehran, Iran.
3 Assistant Professor, Department of Criminal Law and Criminology, Faculty of Law and Political Science, University of Tehran, Tehran, Iran.
4 Assistant Professor, Department of Law, Faculty of Theology and Islamic Studies, Meybod University, Yazd, Iran.
Abstract
Utility tokens serve, on the one hand, as instruments enabling access to services based on distributed ledger technology (DLT) and, on the other hand, have been employed by emerging businesses and start-up enterprises as an innovative mechanism for capital formation and fundraising. This financing model seeks to reduce many of the administrative formalities traditionally associated with investment and financing companies while simultaneously relying on DLT to establish trust and transactional legitimacy without the involvement of centralized intermediaries responsible for validating financing processes. Instead, the credibility of the fundraising process derives from the collective participation of contributors and investors operating across transnational digital networks. This novel financing mechanism gives rise to numerous legal challenges. The issuance and offering of such tokens generally do not occur through conventional legal and regulatory channels established by policymakers and legislative authorities; rather, these processes are conducted through decentralized distributed ledger infrastructures and, in certain instances, through centralized crypto-asset service providers. Consequently, utility tokens hold a legally ambiguous space situated between technological innovation, investment regulation, and financial governance. Employing a descriptive-analytical methodology, this study concludes that the Iranian legal system has thus far adopted a largely non-interventionist and reactive regulatory approach toward the issuance and offering of utility tokens. By contrast, the European Union has sought to distinguish utility tokens from other categories of crypto-assets and, in accordance with their legal nature and functional objectives, has established specific regulatory requirements governing their issuance, offering, and related services.
Keywords

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