Business, linked to cryptocurrencies and the blockchain technology, has not yet been fully approved at the legislative level - the situation exists in many countries, but a number of states are issuing a Pre ICO license. How to legalize a project? What are the mechanisms of the license application, and in which country is it best to obtain a permit?
Table of content:
- The need for a license
- ICO-friendly countries
- Registration procedure
Why do I need a license?
Projects in the area of the Initial Coin Offering are rather promising. Firstly, it is a unique and absolutely new way of attracting investments. Secondly, with their help, many have already implemented ambitious ideas and have earned fortunes. Thirdly, with a relatively small starting capital you can achieve amazing results.
The number of proposals in the ICO field is growing every day. Banners on the Internet, advertising posts in social networks, the news and videos on YouTube - the information flood is huge. Businessmen instantly refocus their interest to the novelties, but in the case with ICOs they face the challenge of legalization. Not everywhere you can easily launch the project.
A blanket ban on the ICO execution is in China. Chinese banks and financial institutions are prohibited from carrying out any activities related to tokens. At the legislative level, there is a taboo on the cryptocurrency, ICO and mining in Vietnam, Bolivia, Indonesia, Libya, etc. Many countries haven’t determined the status of virtual money yet.
Anyway, you as a founder of the ICO, raise funds, make certain promises, and in case of any failure, you’ll be highly likely required to pay the compensation for damages. Large investors generally avoid contact with partners who do not provide legal certificates and written guarantees. A Pre ICO license is an only way to solve the problem.
Where to legalize a project?
Everyone knows that each state has its own laws, so when planning activities in this country, study the conditions in each region. In some states, for example, in North Carolina, you can safely work without a license at all, and the most attractive state in terms of ICO registration is Hawaii. The Government fee here is the cheapest and costs only 3, 000 USD per year.
Switzerland has long been known for its friendly attitude to the cryptocurrency. Here is the real Cryptoland. Licensing is carried out by FINMA. The document is also called “a license to combat money laundering”. In general, any venture investments related to certain risks fall under this definition. Those, who apply to this organization, must meet high requirements.
Japan is a cryptocurrency friendly country. Moreover, BTC has the status of a legal payment unit here, the cryptocurrency exchanges actively develop, and ICO projects are being implemented. But when submitting documents in Japan, it is necessary to prepare for the strict verification, also by the law enforcement agencies, and have the authorized capital of at least 10 million yen, which equals 88,000 USD.
Estonia is one of the most popular countries where you can get a Pre ICO license. At the end of 2017, the token was recognized as a financial instrument. In addition to project activities, crypto exchanges are actively being opened in this country. A loyal tax policy, the shortest terms of registration, an attractive price and the loyal financial regulators attract businessmen.
United Arab Emirates
You can open an ICO company in Dubai. One of the richest and most developed countries in the world, the UAE is actively interested in the blockchain and even plans to introduce this technology as the main currency! But all this will be executed as an experiment. However, as it is noted by those who have already tried to cooperate with the DFSA regulator, it is still rather difficult to open an account for a license.
Australia does not prohibit cryptocurrencies. You can register your project in this country without obstacles, but investors are stopped by a high tax rate. To reduce it experts give such advice how to formalize the company in the local jurisdiction.Then open a bank account. Then register the company in the tax-free zone and open a corresponding account on it. As for the special license, it is not required. Registration is enough.
Other countries and Russia
In addition to the above countries, people, working on the cryptocurrency market, prefer the Czech Republic, Singapore, Gibraltar, and the Philippines as a place of their legal registration and receive a pre ICO license there. Some progress is being made in Russia. In late October 2017, the idea to raise funds with the help of ICOs appeared and a relevant proposal was prepared. The initiative is good, but first the cryptocurrency itself must be legalized.
The license legalizes the use of cryptocurrency and the release of tokens. To obtain it you will need a whole package of documents, including the Terms and Conditions,the dispute settlement policy, KYC, AML and others required by the regulator. This body checks and analyzes ICOs, that have already been conducted and have common features with your project. Analysis of its relevance, the business structure, reality of project implementation and other aspects, crucial for the conclusion.
ICO organizers must provide:
- The Clear formulation of the project purpose
- Their own investment budget
- The projected amount of raised funds (how much do they expect to attract)
- The economic-legal basis of the token
The commission, that decides on the issuance of a pre ICO license, must understand the scheme for the emission of tokens, the volumes and ways of exchanging this digital asset for the fiat money.