• News

ICO IN THE CAYMAN ISLANDS. WHAT COULD BE BETTER?

Published: 12 Apr 2018

The initial coin offering (ICO) is the most modern and popular mean of fund-raising. But at the same time, the most frequently asked questions are: “What is the best jurisdiction for ICO?” or“Where to register (set up) a company for ICO?”.

WHY CAYMANS IS COMFORTABLE FOR LAUNCHING AND CONDUCTING AN ICO?

The Cayman Islands is an offshore jurisdiction, characterized by fast registration and convenience of doing business, as well as exemption from taxes. The Caymans are not included in the FATF and OECD lists as non-cooperative. The largest number of international funds and investment companies are registered exactly in the Cayman Islands. It is a suitable place for obtaining an investment fund license.

High level of legal service, stable political and legislative systems make Caymans as jurisdiction with same opportunities for all business participants. There is a high level of government protection from illegal activities and financial crimes with regard for the interests of all stakeholders. It makes Caymans a perfect country to launch ICO and network business.

LEGAL REGULATION OF BLOCKCHAIN TECHNOLOGY AND ICO IN THE CAYMAN ISLANDS

The role of ICO issuers is not the same as in other jurisdictions.There are some ways to determine the token.

Token as a security. The token can be classified as a security but token issuing is not a securities investment business. The securities are determined in the Securities Investment Business Law. They are a list of instruments that are common in today's financial markets. But “investment contracts” aren’t included in this list so there is no necessity to use Howey test in order to determine a token as a security. In the case of investments ICO issuers must have a special license or be excluded from the requirement to hold a license.

The Cayman Islands Monetary Authority still didn’t make their official opinion in this regard.

Token as a payment tool. Money service companies may use tokens and must have a special license. ICO issuers use cryptocurrency as payment means and are regulated by Money Services Law. This kind of business implies money transmission or currency exchange and requires the license of the Cayman Islands Monetary Authority.

Electronic Transactions Law regulates the terms and conditions of the ICO during concluding electronical deals.

CRYPTOFUNDS

In accordance with the Mutual Funds Lawmutual fund is an entity that issues equity interests. Equity interests must conform to certain requirements, such as carry an entitlement to receive profits in the company and be redeemable or repurchasable at the option of the issuer. ICO issuers can make mutual fund only if their tokens can be redeemable.

ICO AND ANTI-MONEY LAUNDERING

Cryptocurrency balance between using of all benefits of open source anonymous network and preventing money-laundering and terrorist financing. In this way ICO in this jurisdiction is regulated by The Proceeds of Crime Law, as well as The Anti-Money Money Laundering Regulations and the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands.

These Legal Acts require the observance of certain conditions such as client verification, record keeping, internal reporting and control. In this comfortable jurisdiction for ICO every ICO issuer must adopt anti-money laundering procedures during ICO investments collecting. 

In any case, the Cayman Islands always keep place with the times. So we may see in the future new regulatory acts about blockchain technology and cryptocurrencies (register a company for ICO, launching ICO, taxation).

WHERE TO REGISTER A COMPANY FOR ICO - SBSB WILL HELP WITH REGISTRATION AND ASSIST AT ALL FURTHER STAGES.

If you are interesting in ICO development don’t hesitate to contact with SBSB team. For over five years we have been advising our clients in the field of corporate law, international tax planning, finance, international licensing and integrated business support in more than 40 countries. We will be glad to help you.

Yuliya Barabash

Firm: SBSB Legal Services
Country: Ukraine

Practice Area: Commercial

  • Saksaganskogo Street, 99
    Kiev





Find a Global Law Expert

Awards

Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.

Sign up for the latest legal briefing and news within Global Law Experts community, as well as a whole host of features, editorial and conference updates direct to your email inbox.

Naturally you can unsubscribe at anytime.