Are you looking to do a Crypto Token Launch?
Or to set up a Cryptocurrency Exchange?
Most Offshore jurisdictions have either passed (eg Caymans, BVI, Mauritius etc) or are in the process of passing VASP (ie Virtual Asset Service Provider) Legislation. The nett effect of VASP Laws is if you propose to do an ITO or IDO or to mint a new Crypto coin (or if you’re planning to set up a Cryptocurrency Exchange business), and if you want to incorporate in a country where such activity is now regulated you need to apply for a VASP License before you can incorporate.
Previously you could set up such a business in Belize or Seychelles or St Vincent without needing to apply for any form of Special License. Unfortunately. these jurisdictions have all announced that they intend to pass VASP legislation/regulations in the near future and until then, as a matter of policy, they won’t be allowing any business that looks or smells like a Virtual Asset Service Provider enterprise to incorporate in the jurisdiction.
Unfortunately to get your hands on a VASP license is not easy. You’ll need to have deep pockets (eg $US50,000+) to cover legal fees/set up costs and you’ll need to be patient as such a license can take 3 months+ to be approved.
But there is still a viable “Offshore” Incorporation option that does not require one to go down the VASP licensing road, ie the world’s second most popular “Offshore” Jurisdiction, the mighty Panama.
How Panama came into play as a VASP Enterprise locale is an interesting story.
The Panama Legislature in October 2022 passed a Bill that would have established a VASP regime in Panama for the following activities:
- Exchange between virtual assets and fiat currencies.
- Exchange between one or more forms of virtual assets.
- Transfer of virtual assets.
- Custody virtual assets or instruments that allow virtual asset control
- Participation and provision of financial services related to the offer or sale of a virtual asset by an issuer, including, but not limited to security token offerings (STOs).
- Financing through virtual assets
- Authorized virtual asset Liquidity Provider
- Digital Wallet service provider
The bill proposed that the Superintendency of Banks would be the regulator for VASP (virtual asset service providers), payment systems, and electronic money issuers.
The possibility of payments in crypto assets to the State was also to have been regulated by the bill.
BUT under the Panama model of republic such a law can be challenged by the President of Panama.
Which is exactly what happened…
And the Panama Supreme Court found for the President declaring the law Unconstitutional.
Which means that you can incorporate a VASP business in Panama without needing to apply for any form of Special License (ie providing you’re not planning to create/offer a “Security”)
Panama (which does not tax income earned outside of Panama) offers 2 low cost/low admin entities that could potentially be deployed to own and operate a VASP business ie:
A nil tax SA Company: https://offshoreincorporate.com/panama-offshore-companies/ ; AND
A nil tax Private Foundation: https://offshoreincorporate.com/panama-tax-free-foundations/
OCI specializes in assisting Blockchain startups and can assist you to incorporate in Panama should you wish to head down that road.
Would you like to know more? Then please Contact Us:
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.