Last week we were contacted by an Accountant referrer who had a client with a specific aim…. The client wanted to launch a new Cryptocurrency/ICO in a low regulation jurisdiction where such a business could be incorporated without needing to apply for a Special License.
So, our In-House lawyer reached out to his/our Lawyer contacts in each of the nil tax jurisdictions whereat we normally form Companies.
The question put to each Lawyer/firm was “I have a new client wanting to launch a new Crypto coin/ICO. I have viewed the Business Plan. In my opinion what the client plans to offer does NOT constitute a Security. Is such a business a licensesable activity or a prohibited activity in your jurisdiction?”
Here are the responses we received:
BVI: “We recommend that companies that are venturing into Crypto activities should seek legal advice from a BVI attorney. Crypto activities may fall under the Securities and investment Business Act therefore, the company should seek legal advice before proceeding. Please confirm if we should obtain a quote and we will need a copy of the business plan to obtain a quote.”
Panama: “Such a business is neither licenseable nor prohibited in Panama”
Seychelles: Such a business is now licenseable in Seychelles
Anguilla: No reply
Samoa: Such a business is prohibited in Samoa
Dominica: “The type of activity you are referring to is not restricted by the IBC Act of 1996 and as amended thereafter. Nevertheless, crypto activity is a grey area in our jurisdiction, thus it lacks proper protocols and regulations. If a legal opinion on this company is needed from a Dominica lawyer, the rates start with 3,000 USD, depending on the content.”
Belize: This activity is not regulated but neither is it prohibited.
Nevis: “On the application form, there is a section that asks about the purpose of the business. Representatives from the Registry will come and inspect our files. Since there is no legislation it is not illegal but I am not certain how the manufacturing of token will be viewed, since it will used as a form or currency. Let me look into this some more and revert back to you.”
Hong Kong: To my best understanding, there’s no official black and white guideline online to specify whether cryptocurrency or ICO is regulated or prohibited in Hong Kong. However, the SFC have published a statement in 2017 about ICO which you can take a look at: https://www.sfc.hk/web/EN/news-and-announcements/policy-statements-and-announcements/statement-on-initial-coin-offerings.html About licensing in SFC, please go to: https://www.sfc.hk/web/EN/regulatory-functions/intermediaries/licensing/do-you-need-a-licence-or-registration.html Unfortunately we do not deal with clients who are running cryptocurrencies platform or launching ICO, because these are considered as higher risk activities which requires us to conduct enhance and frequent ongoing due diligence so given the fees we charged, we would rather leave it to other expertise (i.e. big law firms) to on board this segment of clients. “
In short if you are looking to launch a new ICO/Cryptocurrency and you don’t want to have to apply for any form of Special license as things currently stand (Note: This information is current as at 8 August 2020) the jurisdictions you’ll definitely want to take a close look at are Panama, Belize and Dominica. OCI can assist you to incorporate a (nil tax) Company in these jurisdictions. Check these links for details:
- Panama: https://offshoreincorporate.com/panama-offshore-companies/
- Belize: https://offshoreincorporate.com/belize-offshore-companies/
- Dominica: https://offshoreincorporate.com/dominica-offshore-companies/
Before committing to incorporate such a business we’d recommend you seek legal advice from a Lawyer on the ground in the jurisdiction wherein you intend/decide to incorporate.
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