Where to set up a crypto company in 2023
The cryptocurrency boom around the world in 2023 does not subside. In a short time, the crypto business has evolved from a risky venture based on rumors to an alluring investment option for investors.
If recently the virtual currency was associated exclusively with bitcoin, now it implies a branched ecosystem that includes more than 1600 types of virtual assets. Each of these assets can potentially become the basis for building a successful business.
If you are planning to establish a crypto company in 2023, this is a great idea! At the same time, the chances of success depend on a number of factors, among which in the first place are 1) the technical implementation of the project, 2) thoughtful legal decisions and 3) an effective marketing strategy. Experts of the Lawrange law firm are ready to take care of all legal issues. Our support can cover both a set of steps at the start of a cryptocurrency startup and further support of the company’s activities in the development process.
The significance of a cryptocurrency exchange business
The prospects for the widespread use of blockchain technology, in the context of the ability to decentralize various IT systems, are no longer in doubt. All over the world, confidence in cryptocurrencies as a means of payment is also increasing. Against this background, digital currencies are becoming an increasingly attractive way to earn money. More and more experts tend to consider cryptocurrency as an ideal tool for saving, financing and investing.
Note! In addition to Bitcoin, crypto enthusiasts are now hearing Ethereum, Ripple, Tether, Litecoin and Dogecoin (if in the context of Elon Musk). Along with this, hundreds of other cryptocurrencies are available today, and their number is constantly growing. Accordingly, the demand for services for the exchange of digital assets is increasing.
The volume of investments in the cryptocurrency sphere in the world market is growing every year. Experts predict investment growth of more than 200% annually by 2024. At the same time, by 2024, the global virtual currency market will accumulate revenues of more than $20 billion. This indicates the profitability and potential prospects of crypto projects.
Note! In addition to directly mining cryptocurrencies, business ideas related to servicing the owners of virtual assets deserve attention. As famous investor Peter Lynch said, “During the gold rush, most gold miners lost money, but the people who sold them picks, shovels, tents, and jeans made good profits.” The current cryptocurrency boom can be compared to a gold rush, and the owners and operators of crypto exchanges are from the manufacturer of picks and shovels.
Legal regulation as a factor in the growth of the cryptocurrency market
The emergence of a legislative framework for regulating the cryptocurrency market in a number of countries makes it possible to clear this area of fraudsters, and also contributes to the security of stakeholders. Every user becomes more secure. Thanks to this, in the previous year, 2021, large institutional players with significant investments entered the market. Such investments are aimed at the long-term accumulation of digital assets.
Note! With the advent of a significant number of institutionals, the volatility of cryptocurrencies will decrease. For example, the scenario of Bitcoin falling to $10,000 becomes unlikely. But it is worth considering that the virtual asset market depends on the rapid development of new technologies, changes in regulations and policies in the traditional financial sector, as well as the influence of large players.
Government regulators are reacting to digital currencies in different ways. Some states tighten the management of the crypto asset market, others support the development of blockchain projects, and still others prohibit the cryptocurrency business. For example, the US Securities and Exchange Commission (SEC) imposes licensing requirements for companies engaged in cryptocurrency transactions. The Chinese government, on the contrary, has banned not only trading, but also mining (extraction) of cryptocurrencies. This led to the migration of miners and the fall in the bitcoin rate.
Important! According to experts, the future of cryptocurrencies in 2023 will be determined by two factors. And it’s not metaverses and decentralized finance (DeFi). In fact, these are: 1) CBDC (Central Bank Digital Currency) – digital currencies of central / national banks; 2) legal regulation of the crypto industry.
Where is the best place to set up a crypto company in 2023?
Legislative regulation of virtual currencies is still being formed. The issue of cryptocurrencies has not been settled yet in many jurisdictions. But some countries have already accepted virtual assets as part of technological progress, and have introduced laws that make cryptocurrency activities legal. At the same time, such a regulated business is losing its appeal to cybercriminals.
Important! Based on experience, Lawrange experts have formed the TOP-5 crypto-friendly jurisdictions in 2023. It includes: Georgia, Lithuania, Poland, Portugal, Great Britain. We recommend those of our customers who will soon register a crypto platform to take a closer look to these countries.
We are ready to provide the following package of services: 1) consultation on the choice of jurisdiction for starting a business; 2) support for the registration of a crypto company; 3) opening corporate accounts in foreign banks and international payment systems for a crypto project; 4) obtaining a crypto license (accompanying registration) in the regulatory body of the chosen jurisdiction. At the request of the client, any service can be provided separately.
Note! Cryptocurrency business is always classified by both government regulators and banking institutions as a high-risk activity. Getting licensed and opening a bank account is quite difficult, especially when it comes to innovative business models (an example of this is staking, receiving passive income by simply storing cryptocurrencies). But this does not stop many crypto enthusiasts. Recently, a lot of applications, blockchain platforms and crypto exchanges have been launched. The competition in the market is growing.
In such conditions, competent legal support makes it possible to start correctly and get a head start in competition with competitors. The involvement of qualified lawyers with relevant experience allows you to properly build the legal foundation of the business, as well as optimize the licensing procedure and coordination with the relevant authorities.
Important! In a number of jurisdictions, crypto business requires licensing, and legal support for this task is indispensable.
Crypto company formation in Georgia
In recent years, Georgia has occupied high places in the ranking of leading countries in cryptocurrency mining. There are no legal restrictions on the exchange of virtual currencies in Georgia. At the same time, the system of legal norms regulating the cryptocurrency sphere has not yet been introduced.
Important! To legally conduct a cryptocurrency business in Georgia, you will need:
- a registered crypto company in the form of LLC or JSC;
- bank account and / or payment system (as an option – a foreign account);
- a license for financial services in one of the free industrial zones (FIZ).
Obtaining a crypto license in Georgia with the support of LA Lawrange provides for the involvement of a registration agent and the ability to do without a personal visit by the client to the country. In particular, after registering a cryptocompany, entering it in the Public Register of Entrepreneurs, a questionnaire is filled out and submitted for the PPE administrator. FIZ Kutaisi is considered as the best option for crypto business. But it is also acceptable to set up a company in such Free Industrial Zones as Tbilisi, Poti, Hualing.
If you are considering the question of where to set up a crypto company, then the following arguments can be distinguished in favor of Georgia:
- the ability to quickly start a business – in just 5-10 business days;
- favorable tax policy, only dividends are taxed – 15%;
- for companies registered in the FIZ – the sale / exchange of cryptocurrencies is not subject to VAT;
- lack of requirements for mandatory hiring of local employees, office rent, bookkeeping;
- the right under a license to issue electronic money, make payments and transfers using electronic money, and so on.
Crypto company formation in Poland
On November 1, 2021, Poland introduced state regulation of cryptocurrency business activities. “Fuses” have been installed to prevent the use of virtual currency for criminal activities, as well as the level of protection for consumers of services of crypto companies has been increased. Poland has added to the list of respectable cryptocurrency jurisdictions.
Important! For legal activities in the field of cryptocurrency, a company needs to obtain a crypto license in Poland, namely, registration in the relevant state commercial register (crypto authorization). To do this, a crypto company and its management must meet a number of requirements. Representatives of LA Lawrange are ready to take over the verification of compliance with these requirements, as well as the process of preparing the necessary documents, both for setting up a crypto firm and for registration in the registry.
In short, the algorithm for establishing a crypto business in Poland includes the following steps:
- obtaining a Polish PESEL tax number;
- company registration – a limited liability company (spółka z ograniczoną odpowiedzialnością or Sp. z o.o.);
- opening a bank account;
- filing information on the final beneficiaries in a special register and sending the necessary information to the tax service;
- entering the company into the register of organizations working in the field of cryptocurrencies.
The following arguments speak in favor of Poland as a crypto jurisdiction:
- availability of bilateral agreements on avoidance of double taxation with more than 84 countries of the world;
- the possibility of remote business registration through the S24 online system, which is regulated by the Ministerstwo Sprawiedliwości (Ministry of Justice);
- the license gives the right to provide services for the exchange of virtual currencies, maintenance of accounts for virtual currencies and brokerage services for the exchange of virtual currencies.
Crypto company formation in Lithuania
Lithuania entered the TOP of the most cryptocurrency-friendly jurisdictions in 2020, when the necessary legal environment for doing crypto business was created in the country. Such activities are clearly regulated and monitored by the Financial Crime Investigation Service (FCIS). The regulation of cryptocurrencies is carried out by the government within the framework of the requirements of the Fifth EU Anti-Money Laundering Directive (AMLD 5).
Important! To start with a crypto business in Lithuania, you should go through the following steps:
- crypto company registration;
- prepare AML / KYC policies in accordance with the requirements of the regulator;
- submit a notification (application) to FCIS and obtain permission to conduct crypto business;
- open a bank account (as an option, a payment system is suitable).
Obtaining a crypto license in Lithuania is carried out according to clear and transparent rules without being burdened by bureaucratic procedures and financial requirements. At the same time, the concept of “crypto license” in the context of Lithuania is used conditionally, since a special permit is issued for the provision of services in the field of virtual currencies, and not a license. There are two types of cryptocurrency activity authorization in Lithuania: the first one is a provider of virtual currency exchange services, the second one is a provider of services for storing cryptocurrencies in custodial wallets.
Among the advantages of Lithuania as a cryptocurrency jurisdiction:
- business-oriented legislation;
- it is quite possible to obtain permission and engage in the exchange of cryptocurrencies or cryptocurrency wallet services in this country (without excessive difficulties);
- the costs of registration, licensing and maintenance of crypto firms are relatively low;
- the provision of crypto exchanger services is not subject to VAT.
Crypto company formation in the UK
In terms of the number of blockchain startups, the UK ranks second in the world. Investments in cryptocurrency projects have increased over the past few years by 300%. The British government is actively supporting the virtual asset ecosystem, making up for lost opportunities in the post-Brexit financial services industry in this way.
Note! Registration of crypto companies in the UK is administered by the Financial Conduct Authority, FCA. Specifically for crypto assets, the FCA has developed and implemented regulations and policies on KYC, AML/CTF. The FCA has introduced requirements for Virtual Asset Service Providers (VASPs) with the freedom to promote innovation. To legalize a business related to virtual currencies, it is not a license that is required, but registration (authorization) in the relevant state register.
A crypto company in the UK is a business aimed at accessing investors and VIP clients. However, for its registration it is necessary to go through rather complicated procedures. And only with the support of experienced lawyers of LA Lawrange, you can practically not take part in them.
Considering the question in which countries to set up a crypto company, a number of arguments speak in favor of Britain, in particular:
- the British crypto license is one of the most prestigious in the world;
- you can find cryptocurrency-friendly banks in the country;
- starting with a crypto business in this jurisdiction, you can count on clear rules of the game.
Crypto company formation in Portugal
At first, Portugal established itself as a country friendly to cryptocurrency owners, and then created favorable conditions for state regulation of the cryptocurrency business.
Important! Portugal does not prohibit commercial activities for the issuance and trading of virtual currencies. But at the same time it is subject to strict AML control. As a matter of priority, state AML regulation is aimed at intermediary companies. Users and miners of crypto assets are currently excluded from AML compliance mechanisms.
The functions of the regulator of business activities in the field of virtual currencies were taken over by the Central Bank of the country (Banco de Portugal, BdP). Obtaining a crypto license in Portugal is a procedure for obtaining permission to conduct cryptocurrency activities for commercial purposes from the Central Bank. The procedure for registering a crypto company in Portugal is characterized by a significant level of complexity. In particular, the regulator should submit a business plan and prove the liquidity of the project. To maximize the chances of success, you will need qualified legal support, and LA Lawrange can provide it.
In favor of setting up a crypto company in Portugal, the following arguments can be distinguished:
- traditionally crypto-friendly climate in the country;
- the opportunity to take advantage of the preferential tax regime in the Madeira Free Economic Zone (IBCM) with a 5% income tax;
- availability of a reliable legal platform for cryptocurrency activities.
Taxes on crypto companies in different countries
Virtual assets are often not considered as a full-fledged payment instrument. The general consensus regarding digital asset tax is that most countries levy tax on crypto income and crypto capital gains. In particular, the following are subject to taxation:
- exchanging cryptocurrency for another cryptocurrency;
- sale of cryptocurrency for fiat currency;
- income from mining or staking.
Note! In some jurisdictions, cryptocurrencies have already received the status of an exchange commodity or an investment asset and are subject to the corresponding tax. Often, crypto companies are subject to corporate tax (capital gains tax), sometimes at a reduced rate.
What is required to establish a crypto company in 2023?
To launch a crypto exchange or any other type of crypto company, you need to go through 10 of the following steps:
- Get legal advice on the choice of jurisdiction and the specifics of licensing cryptocurrency activities.
- Find funding for the venture.
- Select a software provider (for example, for the exchange of cryptocurrencies).
- Register a crypto company.
- Establish cooperation with the bank and / or payment system.
- Implement the necessary security measures.
- Develop and implement AML policies.
- Obtain a crypto license.
- Launch a marketing and PR campaign.
- Keep in touch with lawyers to constantly comply with the requirements of the regulator regarding the activities of the crypto company.
Important! It is necessary to comply with all applicable laws and regulations of the regulator, not only in the jurisdiction where the crypto company is registered, but also in all foreign jurisdictions in which commercial activities will be conducted. Besides, legislation in the field of cryptocurrencies is changing rapidly. In order for the company’s activities not to go beyond the legal framework in all regions where it operates, it is necessary to constantly monitor such legislative changes.
Launching a cryptocurrency project is a rather complicated, but solvable task. This year, the TOP crypto-friendly jurisdictions, according to LA Lawrange, include the UK, Portugal, Lithuania, Poland and Georgia. The legalization of cryptocurrency business in these countries is carried out by obtaining a license or permission from the regulatory body.
Lawrange specialists are ready to provide all the necessary services for the collection of documents and support for the registration of a crypto company in the selected jurisdiction. Our experience helps to avoid mistakes and delays in the course of legal support for the launch of a crypto project.