Citing regulatory concerns, Berlin-based security token startup Neufund has announced plans to freeze its fundraising campaigns and sideline future tokenized equity offerings.

“Many European countries had aspirations to become a blockchain-friendly hub … [T]he authorities have stifled this plan, blocking the innovation in its tracks,” the firm wrote in a blog post Monday.

Launched in 2016, Nefund helped allocate some $19 million in capital through novel equity and security token offerings (STOs), including a blockchain-based initial public offering in 2019. The firm claims to have some 11,000 investors across 123 countries.

Read more: Neufund Gets Nod From Liechtenstein Regulator for Token Offerings

In a statement, Neufund CEO and co-founder Zoe Adamovicz said the security token project could not continue to operate in a regulatory grey area. No legal action was ever taken against the startup, yet requests for guidance were not answered due to “fear of new technologies,” she said.

“The problem is that nobody wants to take the responsibility for neither letting innovation happen, nor for banning it,” Adamovicz added in an email to CoinDesk, placing the blame squarely at the feet of Germany’s Federal Financial Supervisory Authority (BaFin). “We were neither allowed, nor not allowed. BaFin’s default answer is to shy away from risk and responsibility.”

BaFin did not respond to CoinDesk’s questions by press time.

Read more: Openfinance Warns It Will Delist All Security Tokens Without New Funds

Adamovicz said the firm will transition to a yet-unannounced project. The current Neufund platform will be maintained including all equity tokens, wallets and post-investment activities, a blog states.

Kyle Sonlin, founder of Security Token Market, told CoinDesk that allocating capital with a token offering requires “different financial players to act in sync.” His firm has seen an upsurge in requests due to compliance requests, he said.

“To get an issuer to the finish line, it takes more cooperation than just providing one piece of the puzzle,” Sonlin said.

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