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.