Launching an initial Coin Offering (ICO) or blockchain business is a complicated business. Not only does one need to consider things such as technology, tokenomics, and marketing, but you also need to give attention to regulatory requirements as well.
Whilst the popularity of ICOs may have fallen slightly during the end of 2018, this was mainly to do with a lack of regulatory certainty. As a number of jurisdictions have now began to legislate in support of crypto, blockchain, and ICOs, their popularity, along with Security Token Offerings, are set to increase once again.
Here is our guide to the best jurisdictions to consider setting up your blockchain-based, crypto, or ICO/STO project. We have taken a look at a number of features including existing legislation, compliance requirements, business climate, and reputation.
As one of the most politically and economically stable locations in the region, Costa Rica also boasts a very friendly business environment for crypto, blockchain and ICOs. At the moment, employees are allowed to be paid in crypto and there are many businesses throughout the country that accept payment in a range of crypto coins.
The country also enjoys a thriving crypto community, a calendar of crypto events, low operational and affordable staff costs. In addition to this, there is no regulation of crypto and ICOs meaning that with the guidance of a member of our team (ensuring you meet standard compliance and best practice guidelines) you have a high level of freedom when it comes to setting up your business.
Malta is home to the world’s largest cryptocurrency exchange, Binance, as well as countless other large movers and shakers in the industry. Following the introduction of a comprehensive legal and regulatory package in mid 2018, it has built a solid reputation for itself as the “Blockchain Island”. The government also offer assistance in the form of staff salaries, office space and tax credit incentives, making it a firm favourite for a variety of ICO and blockchain businesses. When it comes to ICOs, if your product is a utility token, you do not to follow any regulations but other types of tokens do require strict adherence to the law.
British Virgin Islands
According to statistics, the British Virgin Islands is home to the second largest crypto-community and economy in the world. With a trading volume of over $78.5 billion in the first half of 2017, it was just $5 billion behind the US, which holds the record for the largest crypto market in the world. As of the time of writing, the BVI is yet to issue any guidance or laws that apply to cryptocurrency, and so far they have no other laws that apply specifically to the sector. The government have so far decided to abide by the wait-and-see approach- something that is attractive for those looking to open a crypto business or launch an ICO. Whilst this could all change in the future, it seems unlikely that the BVI government would implement any laws that would hinder the flourishing industry.
Switzerland has always been a popular choice for businesses in the financial sector and crypto-businesses are no exception. Supervised by the Swiss Financial Market Authority (FINMA) who are known for supporting financial technologies and innovation. Whilst they do offer support for crypto and blockchain businesses, it is one of the more expensive jurisdictions to apply for certification. It can also take a few month to get an answer from the regulatory bodies, so if you are in a hurry then you might want to consider going elsewhere.
For those happy to venture just a little further afield, Singapore has cemented itself as the centre of the Asian crypto market. The Monetary Authority of Singapore regulates the activities around ICOs rather than ICOs themselves, meaning that compliance and operating costs are reduced. To launch your ICO or similar in Singapore, you need to set up a foundation which then allows you to declare how your tokens will be treated. Pros include 17% corporate tax with no capital gains, cons include uncertainty over how regulatory conditions will remain in the future.
Israel has also made a name for itself as a “crypto hub”, due to the fact that the government are big supporters of blockchain technology. With a specially formed committee in place to regulate crypto and associated industries, they are not overly restrictive at the moment. Whilst now is a good time to consider it as an option, there is a bit of uncertainty about the distinction between utility tokens and security tokens and it is hard to say how they may be regulated in the future.
For those that are looking for another EU jurisdiction except for Malta, Lithuania could be an interesting options. At the moment the government is very supportive of ICOs and offers easy to navigate regulations and a competitive tax rate of just 15% for corporations. Setting up and ICO is not regulated for now, but those doing so are recommended to contact the Bank of Lithuania to notify them of their intention before launching. Cons include the fact that those launching a security token could find themselves being subjected to heavier regulations and laws, and the impending introduction of a ICO regulatory body, may hinder things slightly.
At Fast Offshore, we are equipped and able to provide advice and guidance to anyone looking to set up a crypto or blockchain business, in a number of jurisdictions. With so much choice out there and a variety of pros and cons applicable, depending on your personal circumstances, the best thing to do is to get in touch with us and let us guide you. Contact a member of our team today for personalised advice on how to get your blockchain venture, IO or even STO, up and running.