SOULBOUND TOKENS: NEW CHALLENGES IN THE LEGAL REGULATION OF CRYPTO RELATIONS

Abstract

The article examines the content and legal characterization of Soulbound Tokens (SBT), which is completely new and potentially outside the definition of "crypto-asset" in the European Union Regulation on Crypto-asset Markets amending Directive (EU) 2019/1973 (MiCA). The research focuses on the unique properties of the SBT tokens such as non-transferability and non-asset value, which will potentially pose new challenges to the existing legal regulation related to the European Union (MiCA), money laundering prevention and data protection legislation.

The first part of the article reveals the technological operating principles and main features of the term SBT. The relationship between the SBT and the concept of crypto-assets established in the MiCA regulation is analysed. By means of logical analysis, the coincidence of both terms is assessed. The revealed existing problems are related to the features of non-transferability and value of SBT. Also, this part analyses the possibility to regard SBT as an object of the Law on the Prevention of Money Laundering and Financing of Terrorism. The problem highlighted is related to the financial value and the conditions of execution of operations.

The second part of the article reveals the relationship between the SBT and the General Data Protection Regulation. There are two types of SBT related to the content of the presented data. Finally, an attempt is made to reveal the problematic nature of SBT as a technology representing personal data and its connection with personal data protection and the mandatory legal norms regulating it. Paying most attention to the requirements of the offer and acceptance, as well as the right to be informed about the processing of such data and the possibility of refusing such processing.