Looking to set up a cryptocurrency business? Not sure which jurisdictions are friendly or supportive towards your business goals? Well fear not because this is the Fast Offshore guide to friendly, on-the-fence, and unfriendly jurisdictions for cryptocurrency and blockchain projects.
Just over a year ago, the Maltese government introduced three acts that regulate the cryptocurrency and blockchain industry, making it one of the most favourable jurisdictions in the world for such activities. As a result, the small, Mediterranean country saw a flurry of start-ups and big names such as Binance, seeking to use the country as a base. Tax rates are low, company incorporation is quick, and licensing for blockchain and crypto businesses is thorough and reputable- if you are looking for the creme de la creme of bases for your crypto endeavours, Malta is the place to be.
Curacao has developed itself as a very crypto-friendly jurisdiction, particularly for those wanting to branch out into crypto gaming. The government welcomes operators with open arms and have developed a very “hands off” approach which is great for startups who are still finding their way. Those interested in crypto gaming can apply for a crypto gaming license, and with tax rates between 0% and 2% on gross bets, this provides a huge incentive to an increasing number of businesses.
The Costa Rican government are very crypto-friendly and Costa Ricans can even have their wages paid in Bitcoin if they wish. The authorities favourable stance towards cryptocurrency with no specialist crypto license required to set up and no legislation pending, it is an interesting choice of jurisdiction for those looking to self-regulate.
Singapore is known for its low-taxes, favourable business environment, and easy to navigate regulatory framework. Over the last couple of years, the government has enacted a number of laws which are designed to help the sector go from strength to strength. Last year, the central bank finalised regulations for cryptocurrency payment services, and the sector is full of crypto and fintech experts and service providers who are on hand to assist and guide.
Sitting On The Fence
The US is one of the countries in the world that has the highest rate of cryptocurrency adoption, but this doesn’t mean it is a good place to set up a cryptocurrency business. The laws surrounding cryptocurrency differ from state to state and even federal authorities and regulators have different approaches to how cryptocurrencies are treated. There are even differences in whether they are considered as commodities or securities, depending on which agency you are talking to. This makes doing business in the crypto sphere rather confusing and with a more streamlined regulatory approach long overdue, setting up business here could be a bit of a risk.
The United Kingdom is known for leading the way in the crypto-realm but digital currencies are still something of a grey area when it comes to using them. They may not be banned but they are not considered as legal tender. This means that no VAT is applicable on their purchase but users must pay a surcharge on goods or services acquired in exchange for cryptocurrency. For those looking to set up a crypto exchange, eWallet or any other kind of cryptocurrency exchange in the UK it is possible, but with regulatory changes, and Brexit on the horizon, it may not be a safe bet for now.
France’s stance on the legality, regulation, and classification of cryptocurrency is still somewhat murky but they government recently introduced a new bill which is the first step to changing things for the better. The bill created a new legal framework to govern cryptocurrency operations and also required French banks to open bank accounts for licensed and compliant entities.
In Germany, cryptocurrency is classed as “units of account” which can be used as tender. Any firm wishing to purchase tokens or use them commercially is required to get a license from the authorities in advance. Any firm wanting to conduct an ICO is also required to get approval and undergo assessment prior to commencement. While the environment is uncertain for crypto for now, they have taken steps to show that the future could be more accepting.
Last year China enforced a blanket ban on all and any cryptocurrency activities taking place within its borders. An access ban has also been implemented on international and local cryptocurrency exchange platforms making it very difficult for citizens to partake in buying and trading. Local financial institutions have also been told that they are not to recognise any digital currencies as a form of retail payment. It seems unlikely that the Chinese government will change the rules anytime soon as outlawing crypto allows them to keep an iron-clad grip on their economy, and citizens wealth.
India’s stance towards cryptocurrency has become increasingly hostile over the last 1 months. In 2018, the Reserve Bank of India issued a circular that advised all private banks to forbid any crypto-related transfers. Then in July of this year, a leaked draft bill suggested that the government is considering banning all cryptocurrency except the digital rupee which they would control. Over the last few months, a number of India-based exchanges have shut down, blaming the harsh conditions imposed by the government.
To find out more about setting up a cryptocurrency or blockchain business, do not hesitate to get in touch. Through our network of global contacts and drawing on our years of experience, we are able to advise you on the best jurisdiction for your needs.