ICO Friendly Countries and Jurisdictions
Which are the most ICO friendly countries? Initial coin offerings, also known as ICOs, are gaining popularity as a way for startups to raise funds. Fundraising using traditional methods, such as bank loans and venture capitalist investments, is time consuming and difficult. This is the result of the extensive regulations which exist in most jurisdictions.
Cryptocurrency provides freedom from government authority. Some nations, such as the United States and China, are taking steps to limit this freedom. These governments want to tax each and every financial transaction which takes place within their borders. For this reason, many startups are choosing to take their initial coin offerings offshore. Three of the most popular offshore jurisdictions for ICOs are Singapore, Switzerland, and the Cayman Islands.
Form a Company in the ICO Friendly Country
To launch an ICO, you first form a company in an ICO friendly jurisdiction. Our organization, established in 1906, is the largest organization in the world that established international companies, foundations and trusts. To set up an company, please call 1-800-959-8819 in the US or Canada or internationally at +1-661-310-2929.
We like Nevis the most as an ICO friendly jurisdiction because, as of this writing. First, they do not have regulations against ICOs. Second, this business friendly jurisdiction has a well-developed offshore services sector. Third, the legislature is continuously making legislation to meet the ever-growing needs of businesspeople, those who need to protect assets from lawsuits and those who need financial privacy. Most or our clients establish a Nevis LLC. One will need physical office, which we can provide for you by sharing our office very affordably. Plus you will need an offshore bank account, which we can help you establish.
Whereas Nevis does not have laws against ICOs, they do have laws to combat fraud. So, be sure your intent and action coincides with looking after the best interest of your contributors. Fortunately, we can set up a company in Nevis quickly, easily and affordably. We also have a relationship with the current premier of Nevis and have established companies there since 1994. For all of these reasons, we think Nevis is the best ICO country. Thus, you can call us at 1-800-959-8819 in the US or Canada or internationally at +1-661-310-2929 to set up a Nevis LLC.
Singapore is frequently cited as being one of the most friendly jurisdictions for cryptocurrency worldwide. The Monitory Authority of Singapore (MAS) governs initial coin offerings held within the nation’s borders. MAS released a guide for the regulation of digital tokens in Singapore. The government stated that they will only regulate currencies which fall under the Securities and Futures Act (SFA).
Cryptocurrencies will be considered securities if purchasers are linked to an ownership or security interest in the property of the issuer. The issuer is required to register with MAS if this is the case.
MAS issued statements encouraging purchasers to exercise extreme caution, citing the significant risk involved in the cryptocurrency market. However, the agency has also made it explicitly clear that it does not regulate cryptocurrencies. MAS is encouraging FinTech related initiatives through a program known as the “FinTech Regulatory Sandbox”. This program encourages financial institutions and investors to experiment with innovative financial products and services.
Singapore is attracting the interest of some of the world’s most exciting startups due to the lack of government regulation regarding ICOs. Bluzelle is one startup which experienced massive success by holding their initial coin offering in Singapore. In 2016, Bluzelle launched a scalable on-demand database service. The goal of this database service is to provide a data storage solution for decentralized internet. Bluzelle uses blockchain technology to provide a solution which will remove points of failure. Additionally, it aims to improve the efficiency of scaling, increase privacy, and enhance overall data storage performance. Bluzelle scored a massive US$ 19.5 million in its ICO.
Bluzelle generated 500 million tokens. Of the tokens generated, 165 million tokens were put up for sale. These tokens accounted for 33% of the total number of tokens. Some well-known purchasers of these tokens included the VCs Kenetic Capital, Hashed, Kryptonite 1, and 8 Decimal Capital. By the third day of the sale, roughly 163 million tokens were sold. According to an official press release, the remaining tokens were purchased in under five seconds.
Switzerland has long held a reputation for being one of the world’s premiere destination for offshore finance. The nation seems intent on keeping that reputation as cryptocurrency becomes more popular worldwide. The Swiss Financial Market Supervisory Authority (FINMA) regulates financial transactions in Switzerland. FINMA has been extremely supportive of blockchain technology, making it one of the more ICO friendly countries.
In 2013, Johann Geversthe, the founder of the software company Monetas, introduced the idea of Crypto Valley. Crypto Valley is an independent, government-supported cryptocurrency zone located in the town of Zug. It was established to take advantage of Switzerland’s status as a offshore financial center while building a reputation as a global centre for crypto technology. Crypto Valley was named and modeled after Silicon Valley. In order to develop the crypto ecosystem in the country, Geversthe created partnerships with a number of stakeholders in the cryptocurrency field. He also attracted major cryptocurrency startups. This was done by ensuring these startups that they would be supported in their operations by the Swiss government.
The Crypto Valley Association supports the mission of Crypto Valley by promoting research in the field. It also provides policy recommendations and organizes various industry events. The extensive development of public and private initiatives combined with the supportive attitude of the government creates an ideal climate for startups. For this reason, it is not surprising that many of the worlds largest ICOs have been held in Switzerland.
Four out of the six largest ICOs were in Switzerland. Tezos, a platform for decentralized applications and smart contracts, raised over US$238 million. Bancor, an open-source protocol for automated token conversions, came away from its ICO with US$156 million. The DAO is a digital decentralized autonomous organization and investor-directed venture capital fund which raised US$142 million. Status, an interface to access Ethereum, raised US$95 million. Singularity Net raised a record-breaking US$36 million in its ICO in just over one minute in December of 2017. This made it the fastest ICO campaign in history.
In early 2018, the Lausanne-based FinTech startup SwissBorg raised US$54 million in its ICO. The money raised was used to fund the development of a computer dashboard and a cryptocurrency exchange. It was also used to create a robo-advisor platform for investment in cryptocurrencies. The ICO drew a massive crowd of investors, with over 20,000 subscribers taking part in the token sale.
The above success stories are quickly establishing Switzerland as a leader in the global cryptocurrency market. It is not just Switzerland’s position on cryptocurrency that makes it so attractive to startups. The traditional offshore corporate entities that Switzerland is famous for can be used in combination with ICOs. Doing so helps to protect the founders of startups from being held liable for the outcome of the ICO. There are numerous ICO legal structures available under Swiss law which can be beneficial in this regard.
The Cayman Islands, a British Overseas Territory, is quickly positioning itself to be one of the most advantageous jurisdictions for hosting an ICO. Unlike many other jurisdictions which are seen as being favorable for ICOs, the Cayman Islands does not lack regulation. The regulatory framework for financial transactions, including those conducted with cryptocurrency, is well-established. The advantage to this is that ICOs held in the Cayman Islands will meet rigorous international standards. The Cayman Islands is gaining a reputation for being one of the most reliable jurisdictions to start an ICO. This is the case since ICOs are inherently international.
While the regulatory framework of financial transactions in the Cayman Islands is well-established, it is not cut and dry. The amount of regulation that a cryptocurrency is exposed to depends on the nature of the token being issued. Tokens in the Cayman Islands are measured against the Howey Test, which is used to determine whether or not a financial instrument is considered an investment contract. Investment contracts are contracts, transactions, or schemes in which a person invests their money in a common enterprise. This person is lead to expect profits solely from the efforts of a third party or promoter. Though all cryptocurrencies will be measured against the Howey Test in the Cayman Islands, experts suggest that most tokens will not pass. Tokens which do not pass the Howey Test are not considered securities under Cayman Islands law.
This strong legal framework is attractive to startups who worry about ambiguous legal environments in other jurisdictions. This framework establishes a certain degree of security that the laws in the Cayman Islands will not change wildly with regards to cryptocurrencies. For this reason, startups looking to hold ICOs in the Cayman Islands do best when they have clearly established goals and organizational structure. The payoff for startups hosting ICOs in this environment has the potential to be huge.
On May 31, 2018, the Cayman Islands startup Block.one raised US$ 4 billion. The ICO has thus far eclipsed all of the largest initial public offerings on stock exchanges this year. The most remarkable part of the Block.one story is that its flagship product is not even live yet. Block.one used the ICO to fund its blockchain platform called eos.ios. The multibillion-dollar fundraising effort raised more than double any previous initial coin offering in history. However, subscribers do not yet have a clear indication of how the majority of the funds will be used. The founders of Block.one have run other successful blockchain projects. The massive amount of support that they received in the ICO is riding on the hope that they will be able to repeat their success.
Block.one offered a cryptocurrency called eos in the ICO. Participants in the ICO used the cryptocurrency ether to purchase the new eos tokens. The initial coin offering brought in 7.12 million in total ether. Moreover, the ICO has brought in the equivalent of $4.1 billion at Thursday’s U.S. dollar exchange rate of $576 per ether.
ICOs are complex events which require careful planning and consideration. Certain jurisdictions are more favorable than others for hosting ICOs. However, it is important to note that the events themselves are by nature international. This is because people from all over the world have the ability to purchase the new cryptocurrency being offered. For this reason, it is essential that startups consult the advice of experts with experience in multiple jurisdictions.