Digital asset regulation and tokenization in Andorra

A business seeking to represent assets digitally in Andorra needs to separate the asset offering from the permissions of professionals involved in issuance, custody or trading. Law 24/2022 establishes the Principality’s own framework. Proximity to the European Union does not turn Andorran authorization into European market access.

The digital overseer role and the distinction between native and secondary representation are particularly relevant to project design. This guide connects issuance documentation, the Andorran Financial Authority’s participant register and the rights a holder can enforce.

What digital asset representation rules cover

Law 24/2022 of June 30 regulates digital asset representation and professional market participants. Its consolidated text incorporates references to Law 7/2024 on financial instruments. Article 3 excludes five cases from the statute: free offerings, assets created automatically through mining, unique and non-fungible assets programmed as such from the outset, financial instruments and electronic money. Mining and dealing directly on own account are also excluded where they are the only activity. Exclusion from this statute does not mean exemption from financial regulation. Nor is categorization self-determined. Articles 5 and 6 assign it exclusively to the AFA, which decides by reference to substance, understood as legal nature and dynamic functionality, may request any additional information it needs, and contemplates that an asset may start in one category and change into another or become hybrid during its life.

Article 4 distinguishes public and private offerings and specified exceptions, and sets two thresholds that should not be confused. Issuances of up to two million euros are exempt from AFA authorization but remain subject to registration, documentation and monitoring requirements. A public offering also directed at retail clients is limited to a maximum of one hundred and fifty retail investors and eight million euros per issuance, calculated over a twelve-month period. Beyond those retail investors, a public offering may only be directed at professional clients authorized both under Andorran law and under the law of their country of residence. It is not accurate to state that every issuance requires the same license, or that an exemption from authorization removes the other obligations.

What the AFA and digital overseer each do

The AFA processes participant authorization and registration. Its private portal receives applications through the appointed digital overseer. Opening a portal account is not a favorable decision and cannot be advertised as approval to operate. The authority distinguishes participant applications from issuance procedures.

The digital overseer register identifies professionals authorized for the statutory liaison, monitoring and control role. An overseer does not replace the AFA or certify returns or absence of risk. The role requires applicable professional qualifications and independence, alongside the issuer's and provider's own responsibilities.

Which permissions participants need

The public participant register shows the regime is applied in practice: MoraBanc is listed for custody, reception and transmission, and execution of orders; Fimarge for custody and reception and transmission. This difference matters when designing a service, and the statute itself explains it: an operating entity of the Andorran financial system wishing to carry on any digital asset representation activity must at least provide a digital asset custody service. The current entry and the specific activity must be checked, without extending one entity's authorization to another operator or product.

The AFA's March 2024 guide separates prior authorization, registration and commencement. Combined trading and custody require separate applications, applicable minimum capital amounts must be added, and actual commencement must be notified. The periods are specific and sequential: the AFA has thirty working days from filing to verify that the application is complete, a period that does not start until payment of the preliminary verification fee is evidenced; if documents are missing, it grants one month to provide them and, if that month passes without a response, closes the file as withdrawn; once the application has been notified as complete, it has five months to grant, request additional information or refuse.

Capital must be share capital, without share premium, and fully paid up before activity begins, or covered by an equivalent bank guarantee if it is not paid up when applying. An entity already authorized by the AFA as an operating entity of the financial system is exempt from several sections of the form, including those on shareholders, the management body, and fitness and propriety, those on group and related entities, and those on share capital.

How the token connects to the represented right

Article 5 of the statute distinguishes native and secondary representation. Where assets require deeds, book entries or official registration, the technological structure must respect and integrate those formalities. A token may evidence holding within a system without itself determining the legal validity of a transfer of the underlying real estate, receivable or equity interest. The statute also imposes three subject-based restrictions that should be checked before designing the structure: a natural person cannot be an issuer; only banking entities may issue tokens as a means of settlement or as a representation of a currency at par; and only operating entities of the Andorran financial system may act as market makers.

Cases & Lacambra's 2022 analysis identifies tensions between financial exclusions and references to financial tokens. This is historical professional analysis, not a current determination of every case. In a specific issuance, the obligor, the content of the right, the relevant register, the transfer restrictions and the enforcement mechanism must be determined before selecting an architecture or market.

Which guarantees and controls operations require

The supervisory guide requires professional liability insurance, a bank guarantee or an equivalent guarantee before commencement, alongside directors' and officers' cover. Combining activities also affects coverage amounts. These requirements address specified professional risks; they do not turn balances or tokens into guaranteed deposits or ensure full recovery.

The statute provides controls, documentation and ongoing service requirements. Cross-border operations also require assessment of solicitation, distribution and destination-country permissions. Andorran authorization is not MiCA authorization or evidence of EU market access. Technological testing and tax advantages do not establish sectoral permission either.

How to prepare an Andorran application

The initial working document should describe the asset, issuer, intended offerees and holders’ rights. That information supports assessment under Article 4, justification of any exemption and separation of issuance documents from provider applications. The digital overseer and project advisers should check the BOPA text where a question depends on the Legal Portal’s informative consolidation.

Next, map custody, order reception and transfer execution against the AFA register. Preparation should cover activity-specific capital and guarantees, underlying asset formalities and distribution countries. Offering to residents abroad requires examination of those markets too; Andorran permission does not settle that assessment.

To understand how this framework applies to your project, discuss your case with our team.