Where to Establish a Cryptocompany? Overview of Countries

Elena Mashina

Contents:

Currently, the idea of establishing companies whose activities are related to cryptocurrency is becoming increasingly popular. It is preferable to establish such companies in jurisdictions with flexible regulation of this activity which in turn creates a comfortable environment and opportunities for their further development. There are not a large number of jurisdictions in the world today that are appropriate in this regard: Switzerland, Estonia, Gibraltar, Japan, Singapore, Australia and the USA. Due to the fact that entrepreneurs have many questions about how a cryptocurrency company should be registered, we have made a short overview of the most favorable jurisdictions.

Registration of a cryptocompany in the USA

First, at the start of a business plan, it is necessary to choose the state in which the company will be incorporated. Regardless of the state, it is possible to register as one of the three types of legal entities:

Limited Liability Company (LLC);
Partnership;
Corporation (Corp.).

Let us take Washington State as an example.

The director of the company may act as such an agent, but the precondition is that this person must be a US resident, so a local director is usually appointed for such purposes. The director applies for the registration of the company, attaches the articles of association of the company and provides all additional information requested by the state secretariat. Also, in addition to the articles of association, the application must be accompanied by an operating agreement containing information on the ownership structure of the company and how it will operate. Then an EIN (Employer Identification Number) must be obtained, which is issued by the IRS (Internal Revenue Service). To carry out all the above you will also need: personal data of the founders of the company, completed statutes, certificates of no criminal record, prepared business plan.

Crypto license is issued by FinCEN (Financial Crimes Enforcement Agency). This agency is responsible for registering companies as a money services business (MSB) [1]. For more details on how to obtain the license, see the article "How do I get an MSB license in the U.S.?"

Registration of a cryptocompany in Switzerland

The most attractive cantons in Switzerland suitable for launching IT startups are Zug and Zurich. In Switzerland, you can create a cryptocompany in the following legal forms:

GmbH - limited liability company (minimum share capital is 20,000 francs from one founder and one director; the minimum share is 100 francs);
AG - Joint Stock Company (AG has a minimum share capital of 100,000 francs. However, only 50,000 francs need to be deposited at the time of registration).

Once you have selected a canton, in which you plan to register company, you should ask a lawyer to prepare incorporation documents:

Articles of Association of the Swiss company;
Application to the Commercial Registry for registration of the company;
Registration of waiver of transactions with real estate in Switzerland (Stampa and Lex Friedrich Declarations).

Then all documents are submitted to the Commercial Registry of the canton, which after verification of all documents issues a formal statement with information about the company.

Cryptocurrency and blockchain projects are regulated by the Swiss Financial Market Supervisory Authority (FINMA) that also issues the license. Depending on the nature of the project, it may be a stock exchange license, a banking license or a Fintech license. The body publishes guidelines for different types of crypto projects to help them comply with law. In 2018, FINMA formed a partnership with the SIF (Swiss State Secretariat for International Finance) to develop blockchain projects and propose changes to existing legislation covering innovations.

Registration of a cryptocompany in Estonia

As we said before, first of all you need to register a company and then apply for cryptolicense. The registration authority in Estonia is the Commercial Register of Enterprises [2], and the registration procedure of Estonian companies is governed by the Commercial Code. The process of collection and submitting documents is complex, but with competent legal assistance it will be less time-consuming and complicated. In Estonia it is possible to register a company in the following legal forms:

General partnership (TÜ);
Sole Proprietor (FIE);
Joint Stock Company (AS);
Limited Liability Company (OÜ);
Estonian branch of foreign company.

As a rule, cryptocurrency companies are registered in the form of OÜ. In fact, the Estonian Register is unique in Europe, as it allows you to open a company online via ID-card in 30 minutes. Within the registration process, the following package of documents must be collected and the following requirements must be met:

Certificates of no criminal record for all persons related to the activity of the company;
Copies of passports of all persons who will manage the company;
CV of the officers;
Minimum share capital of 12,000 Euros;
Proof of physical presence (office in Estonia);
The management board of the company should be located in Estonia:
- The board member and the compliance officer must be Estonian residents, according to the Income Tax Act (usually local directors and officers are hired for this purpose);
- The board must have a proper business reputation;
- Compliance officer should work permanently in Estonia and prove impeccable business reputation, i.e. provide supporting documents of education, skills and experience;
- The existing bank account / PSP account in a company belonging to the European Economic Area, which provides cross-border services in Estonia or has a branch in Estonia;
- KYC/AML policies and detailed description of the company's activities (business plan, development forecast).

After reviewing the package of documents and checking that all the conditions are met, the registration authority includes the information about the company in the register and issues a formal statement from the register - the Registry card.

Then the process of applying for a cryptolicense begins. In Estonia, there is one license for both activities: a license of virtual currency exchange service provider for fiat currency (fiat to crypto, crypto to fiat and crypto to crypto) and virtual currency wallet service provider. The issuing authority of cryptolicenses is the Financial Intelligence Unit (FIU), which is an independent government agency. You can read about the licensing process in our article "Obtaining a cryptocurrency license in Estonia".

The FIU application is processed within 60 days (this term may be extended for another 60 days). The state fee for obtaining a cryptolicense is 3,300 euros.

Registration of cryptocompany in Gibraltar

In 1993, the Gibraltar government decided to transfer the management of the Companies Registry to a private company, Companies House (Gibraltar) Limited [3].

The Gibraltar Financial Services Commission (GFSC) is the regulator of the financial services market. In May 2017, the Gibraltar government published a consultation paper discussing proposals for a regulatory framework in respect to DLT - blockchain technology. In September 2017, the GFSC announced that a new regulatory framework for DLT would be introduced, and on October 12, 2017, the Gibraltar government introduced the Financial Services (Distributed Ledger Technology Providers) Rules 2017 under the Financial Services Act. The Government of Gibraltar claims that the GFSC is the first regulator to introduce a DLT regulatory system. The purpose of the legislation is to protect consumers and Gibraltar's reputation as a safe country for companies using DLT.

The first step for entrepreneurs who want to start a cryptocurrency company will be to fill GFSC’s form and submit an initial assessment form. The following preliminary documents and information will be required to fill the form:

The company's business plan;
Corporate structure of the company;
White paper (only for companies planning to issue tokens);
Information on how the company will store and use customer assets;
A list of functions to be outsourced and details on the outsourcing arrangements offered. For example, IT support, software development, identity verification, and more;
Potential risks and mechanisms for their mitigation.

Registration of cryptocompany in Australia

It is possible to register a company in Australia in the following legal forms:

Private company - Joint stock company with shareholder liability;
Private company - Joint stock company with unlimited liability;
Public Company.

Companies are registered by the Australian Securities and Investment Commission. The authorities do not provide an option to apply online. You can apply by yourself or through a representative. It takes 20-30 days to file the company registration application directly with the ASIC. If you go through an intermediary, you will speed up the process (1-2 days), but you will need to pay a considerable extra fee for the representative's services. You will need to attach a receipt for the registration fee to your application.

AUSTRAC, the Australian Transaction Reporting and Analysis Center, is a government agency responsible for issuing cryptolicenses. It was created in 1989 to prevent money laundering and terrorist financing. Now it controls all business related to cryptocurrency activity. You can read more about cryptolicense in Australia in our article "How to get a crypto exchange license in Australia".

So, we've looked at a few of the most favorable jurisdictions for registration a cryptocurrency company. Every country mentioned above has its own licensing regime in order to regulate a market of virtual currency exchange and digital currency wallet services. If you have any questions or need legal assistance, please contact a lawyer of A4 Law Firm before starting the registration process. We can study together the features of the legal field of a particular jurisdiction and your project and help you with the license obtaining.

[1] MONEY SERVICES BUSINESS REGISTRATION FACT SHEET. URL: https://www.fincen.gov/sites/default/files/shared/FinCENfactsheet.pdf.

[2] E-Business Register. URL: https://www.kohus.ee/ru/bazy-dannyh/kommercheskiy-e-registr; https://www.rik.ee/en/e-business-register

[3] COMPANIES HOUSE GIBRALTAR. URL: https://www.companieshouse.gi/publications/C0001.pdf