How To Set Up a Cryptocurrency Exchange Offshore

With the boom in growth and value of Cryptocurrenceis around the world doubtless demand for Bitcoin or Cryptocurrency exchanges is going to increase.


For the uninitiated a Bitcoin or Cryptocurrency Exchange is an Online market place where you can buy and sell cryptocurrencies and even pay for one type of Cryptocurrency using another form of Cryptocurrency.


Such a business lends itself well to an “Offshore” Corporate Structuring Plan. This article examines how…


Licensing Options


If in your business model the investor gives you money and you use that money to go and buy a stock of cryptocurrency/s and you then transfer ownership of that currency/s to the investor that would be a licenseable activity requiring either a Broker’s License or an Investment Adviser’s License.


But if all you are doing is supplying a market place where willing buyers and sellers can meet and buy/sell Cryptocurrencies a license technically should not be necessary (See below). That said, it can be very useful to obtain some form of Special License as it will open the door to a much wider range of banking partners.


Given that the legal personality of a Cryptocurrency Exchange is still very much up for debate there are a number of Licenses you could potentially apply for “Offshore” including:


  1. A Broker’s License in Belize; or
  2. Broker’s License in Seychelles (known in Seychelles as a “Dealer’s License); or
  3. A Broker’s License in BVI; or
  4. A Panama Financial Services Company; or
  5. A Financial Adviser’s License in Seychelles; or
  6. A Financial Adviser’s License in Belize; or
  7. A Costa Rican Data Processing License (this type of license is commonly used by Ewallet and Payment Processing Providers)


The cost to incorporate and apply for a License for businesses of the kind described above typically ranges from $US7,500 to circa $25,000.


Is a License Needed?


Another possibility is to apply for a Bitcoin/Cryptocurrency Exchange License. This is a recent invention in the International Financial Services Industry. Both Japan and the Philippines for example have recently passed legislation providing for the licensing and regulation of such businesses. Other jurisdictions are reportedly in the preparatpry stages of creating enabling legislation.


The sands are constantly moving under the feet is in this industry; new licensing possibilities for Bitcoin Exchanges are popping up all the time. Before committing to incorporate such a business it would be wise to seek legal advice as regards the Licensing Options on offer as, by the time you decide to actually incorporate such a business, there could be multiple new Licensing possibilities/opportunities on offer. Per above the bottom line is if you do/can obtain some kind of special license for your business that is going to gain you access to a much wider choice/range of banks.


Certainly in some of the more sophisticated (ie highly regulated) jurisdictions it’s possible that such a business model would constitute a Licenseable Activity. Hence, ahead of incorporating your business you should seek legal advice (in the country where you plan to incorporate) on whether you would need to also apply for a License as the penalties for running a Financial Services type business without a license can be substantial.


That said, as things currently stand in most if not all of the International Offshore Financial Centres, if your Company already owns the cryptocurrencies and you are selling them or if all you are providing is a marketplace/shop where people can buy such currencies (by tendering either hard currency or cryptocurrency) such a business shouldn’t need any form of special license.  It’s like having an online store where people buy pre-made software that you’ve pre-bought from elsewhere or swap one form of software for another. A license is not needed for such a business in any of the “Offshore” Incorporation Centres currently. Why should a Cryptocurrency store/exchange be treated any differently?


Hence if you don’t want or need a special license at this time one can see no good reason why you couldn’t (or indeed shouldn’t) incorporate your business “Offshore” in a low regulation and low or nil tax environment.


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