WHERE TO REGISTER AN ICO OR CRYPTO PROJECT?

With all the buzz today in crypto, about SegWit, and smart contracts, many investors ignore one of the most important keys to an ICO’s success: the location. Cryptocurrencies are by their nature decentralized and globally useful, making the location of the founders seemingly irrelevant. But there’s more than meets the eye. Many countries offer unique benefits to prospective crypto teams, and other organizations have taken additional steps, such as organizing as non-profits. At Coinist, everyday we see more and more ICOs being submitted to our ICO calendar and directory and we’re starting to notice trends in the location of these projects!

NEO was founded in China, Aragon hails from Spain, and TenX calls Singapore home. Cryptocurrencies are truly a global phenomenon. Each of these countries has pluses and minuses. China just banned ICOs and Bitcoin exchanges, a move that we’ve covered elsewhere. How NEO and other Chinese coins will handle this long-term remains to be seen.

REGISTER YOUR ICO IN SINGAPORE

However, we’ll examine TenX ‘s choice of Singapore more closely, as it’s germane to their success. Firstly, Singapore is a global financial hub. Per the Global Financial Centres Index rankings, Singapore is the #3 city for finance in the world, #1 in Asia. It’s a logical choice for any burgeoning business. Second, Singapore has favorable climate for start-ups. Light taxes, and a track record of successful start-ups and ICOS, attract future teams.

The overlap between start-ups and cryptocurrencies is significant. They face similar problems and are often similar size companies. Lastly, Southeast Asia is a huge growth market. Per the TenX whitepaper, 50% of the population is underbanked. There’s tremendous room for growth. However, things change fast in crypto, and the Monetary Authority of Singapore issued a warning in August that they would be keeping an eye on cryptocurrencies. For now, Singapore remains one of the best places to launch an ICO.

With China and South Korea banning ICOs, two other popular destinations have been temporarily shuttered. But ICOs are still often launched outside the United States. Many specifically exclude Americans from taking part. This is a function of America’s financial laws, as well as the long reach of the SEC. The Foreign Account Tax Compliance Act (FATCA) governs the foreign holdings of American citizens. There can be hefty amounts of red tape for companies and ICOs that take American money. Monaco Visa and Polybius are two prominent projects that prohibited US citizens from investing. Also, with the SEC potentially cracking down on ICOs and labeling coins as securities, teams can save themselves a lot of headache operating outside the US.

REGISTERING YOUR ICO IN GIBRALTAR

A new popular destination for ICOs is Gibraltar. Long have small nations or islands been centers for gambling, online poker, or offshore banking. The government of Gibraltar attempted to cash in on the ICO mania and attract prospective crypto teams with a recent statement. Gibraltar’s regulatory body distinguished between coins that are securities, and others that are not. The distinction is often driven by whether a token has in-app functionality, or some other practicality, as opposed to being a pure investment.

Gibraltar’s ability to recognize this is a good sign that it’ll be a friendly place for teams to work. As well, the nation is a tax haven. Many governments haven’t yet recognized that distinction, instead indiscriminately banning all ICOS. This gives Gibraltar a leg up when teams are looking around for somewhere to set up shop.

REGISTERING YOUR ICO IN SWITZERLAND

Another country with a strong banking historycapitalizing on cryptocurrency is Switzerland. Tezos is a prominent company operating out of Switzerland, and per Forbes, some $600 million has been raised for ICOS there. Bancor and Status are other teams operating out of Swizerland. Previously known for their banks and chocolates, the Swiss have recently cracked down on ICOS, but maintain a general openness towards blockchain technology.

A recent statement by the Financial Market Supervisory Authority, the Swiss regulation board, stated: “FINMA recognises the innovative potential of such technology and has been supporting efforts in developing and implementing blockchain solutions in the Swiss finance industry for several years.” Countries worldwide are cracking down on scammy ICOs, even if they aren’t banning ICOs altogether. But Switerland, Gibraltar, Singapore, and other nations will continue to reap the benefits of being crypto hubs for the foreseeable future.

REGISTERING YOUR ICO AS A NON-PROFIT

Another unique step many cryptos are taking is labeling themselves non-profits. This is impossible for some, like the DAO, where investors essentially bet on the project making money. But the versatility of blockchain technology is proven again everyday, and non-profits are the latest field to embrace it. Projects like GrantHero and RootCoin are non-profits operating and fundraising through blockchain. This has myriad advantages. It allows donors greater anomity. It alleviates concern about being a pump-and-dump. And there are tax boons. In the United States, non-profits don’t pay Federal, State, or Sales tax. This isn’t a new idea. United Way has accepted Bitcoin donations since 2014. However, for American contributors, the IRS doesn’t yet recognize Bitcoin as a currency. So donating may not earn you a tax break quite yet.

One other reason teams are embracing non-profit status is to avoid being labeled a security. Wise crypto teams have taken steps to avoid being too similar to conventional securities, not wanting the SEC to crack down on them. Non-profits cannot issue shares, which is one of the most prominent characteristics of a security. Many coins that gave dividends and voting shares are in danger of being tagged as securities. Setting up as a non-profit avoids this problem. Non-profits generally enjoy lax regulation and other tax benefits globally, and aren’t examined or audited in the same way conventional businesses are. There is, of course, potential for teams to pose as charitable just to save money on taxes.

CONCLUSION: FRIENDLY DEVELOPMENT HUBS ARE DEVELOPING

There’s no telling which country will next ban ICOs, or officially recognize cryptocurrencies. Investors, as well as development teams, will continue to keep a close eye on potential development hubs.