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One of the most important decisions founders will make when setting up a crypto company is deciding where to incorporate. It’s a simple decision with profound implications. One change in regulations or a simple change in taxation rules could provide serious complications for any new crypto venture, and as such, choosing the right city to incorporate in is critical.
The rise of cryptocurrencies is irreversible, and some cities are capitalizing on the massive opportunity this presents – both for the cities themselves and for the communities they support. A few in particular have actively embraced cryptocurrencies, and are turning themselves into magnets for crypto investment.
After hours of research, I’m excited to reveal the cities which I believe provide the best balance of opportunity, stability, and access to funding for founders:
- Zug, Switzerland
- Hong Kong
- San Francisco
- Dubai, UAE
- Tokyo, Japan
Let’s get started.
Commonly known as “Crypto Valley”, tiny Zug has quickly risen to become one of the top destinations for setting up a crypto company. A decentralized political system and a light-touch approach to crypto regulation have turned this sleepy town into a magnet for crypto companies, ICOs, and investors looking to benefit from the attractive climate for research and development here.
Zug has been on the forefront of crypto innovation for years (Ethereum was incorporated here all the way back in 2014), and the city is now home to dozens of crypto startups and blockchain accelerators – as well as the Crypto Valley Association, the city’s official blockchain community.
In addition, you can even pay bills and taxes here through Bitcoin, which is officially accepted as a currency – what’s not to love?
On account of the entrepreneurs that have already migrated to Zug, the city boasts a large talent pool for its size. With this talent, has come a significant amount of capital. Crypto founders will find that Zug is a place brimming with funding, and high-quality talent and mentorship to go along with it.
In addition, crypto founders will benefit from the huge community of crypto firms that have already set up shop in Zug (Ethereum, Tezos, Monetas, and many others have a presence in town).
The crypto community is vibrant, supportive, and growing – which is exactly what one needs when starting up a new venture. Part of this ecosystem is the Crypto Valley Association, a government-backed organization that’s dedicated to turning Switzerland into a world leader in the crypto and blockchain spheres. The CVA hosts a number of networking events each month and serves as a forum for crypto entrepreneurs to learn from one another.
Another significant benefit of setting one’s crypto company up in Zug is its tax rate, which is minimal for crypto companies (even in Switzerland, the canton boasts the 5th lowest tax rate among all others). As is true in the rest of Switzerland, this low-tax environment is ideal for most businesses.
Lastly, in a world of crypto markets where volatility reigns supreme, it should come as no surprise that crypto entrepreneurs are flocking to Zug (and Switzerland more generally) for its famed stability. The government’s opening-up to crypto has been slow but methodical, and its light-touch approach to crypto regulation lies in contrast to most other foreign governments, which have taken a haphazard approach to regulating cryptocurrencies.
The cons of incorporating in Zug are few and far between, but they do exist. Some crypto entrepreneurs may be put off by the canton’s high cost of living, which should be a consideration for anyone looking to start their venture here.
In addition, although Zug is a growing crypto hub, it doesn’t yet have the international profile of Singapore or Dubai, meaning one may still have to travel further afield to find high-quality blockchain talent or capital that isn’t already tied up.
What the experts say:
Ralf Glabischnig, partner at Zug-based Lakeside Partners, shares:
Crypto Startups should establish their business in the Crypto Valley because Switzerland has decentralization and consensus in their DNA! Already more than 350 companies with more than 3000 experts are working here in the blockchain field (see CryptoValley Directory)
- Crypto Valley Association Official Website
- Make a visit to Zug with CryptoExplorers
- Blockchain Summit event (7 November 2018)
- My list of crypto companies in Zug you should get to know
After the US and Switzerland, Singapore was the third-largest destination for ICOs in 2017.
The tiny island city-state has long been a hub for international business, and recently Singapore’s central government has started making a concerted effort to attract crypto firms to its shores by setting up FinTech incubators and drafting clear regulations around cryptocurrencies. In particular, Singapore’s central bank alone has set aside a reported $166m for developing and investing in new crypto and FinTech projects.
The city-state also boasts a vibrant crypto ecosystem, with numerous crypto events and meetings happening around town every week. Finding an advisor here for one’s crypto company is easier than in most places, and there’s also a wealth of engineering talent in this cosmopolitan city.
Always critical for crypto companies, the taxes in Singapore are low, ranging from 0-20% for most businesses. In addition, the central government has so far taken a light-touch approach to crypto regulation – much of this is due to Singapore historical position as a global financial hub, but the government is open to and curious about experiencing with cryptocurrencies themselves.
With literally hundreds of banks and VC funds headquartered on just a few square kilometers of land, proximity to massive amounts of capital is probably better here than anywhere else in the world.
Founders will find it convenient and easy to line up meetings with investors here, which are more open to investing in crypto companies than in most other cities. In addition to all that capital, Singapore has a massive crypto ecosystem, with numerous crypto startups headquartered here.
In addition, it’ll soon be home to a dedicated cryptocurrency and ICO advisory center, which will act as a hub for crypto founders looking to locate talent and start up their own venture in the city-state.
In addition to capital, Singapore is also home to a wealth of engineering talent – both homegrown and from overseas. It’s home to several of the world’s top research universities (including the National University of Singapore) and is a magnet for engineering talent on the corporate front as well.
The ranks of blockchain engineers in Singapore are small still and slowly growing, but their numbers are likely to increase as more crypto firms set up shop in the city-state.
There remains a lack of regulatory clarity around the launch of ICOs in Singapore. Officially, Singapore’s stance has been to allow ICOs for the time being, and in the past, it has explicitly allowed any virtual currencies that do not engage in illegal activity, such as gambling or money laundering. Still, many investors and entrepreneurs remain cautious, as updated regulations have not been announced yet. As recently as several months ago, Singapore lawmakers met to discuss additional regulations around ICOs, but the results of those conversations are pending as of now.
What the experts say:
Bobby Ong, CEO of CoinGecko, shares:
CoinGecko is incorporated in Singapore because the regulators here have a very progressive attitude towards blockchain technology and are supportive of startups in this space. Also, for the first 3 years of incorporation, startups here are given full tax exemption on the first $100,000 of normal chargeable income and a further 50% exemption on the next $200,000 of normal chargeable income. This is a very attractive benefit for startups considering incorporation in Singapore.
Laurent Dedenis at Singapore based Acronis, shares:
Most people will agree that Singapore is regarded as one of the best ran countries in the world. Singapore is efficient, transparent with a sound and mature Legal system. The MAS (Monetary Authority of Singapore) has designed a flexible framework regulating Crypto Currency and ICOs locally but also adapted to change quickly so that it would support the fast pace of the blockchain economy.
Still, Singapore has got a limited number of real Blockchain experts and the size of the country makes it more difficult to hire talent, but it sure is set to become one of the main hubs for Blockchain projects in Asia – and possibly, in the world.
- Singapore FinTech News
- StartupBootcamp for FinTech in Singapore
- Singapore Crypto Facebook Community
- Index of Crypto Events in Singapore
- My list of crypto companies in Singapore you should get to know
Why Hong Kong?
Alongside, Singapore, Hong Kong is quickly developing to become the second-largest hub for cryptocurrencies in Asia. Like Singapore, Hong Kong’s status as a lightly-regulated banking hub means it has an abundance of capital, dealmakers, and advisors to ensure that a potential ICO goes smoothly.
As regulations on ICOs in the United States and China have become more restrictive, founders have increasingly been considering Hong Kong as a launchpad for their crypto companies.
Hong Kong has a thriving crypto community, and a number of blockchain accelerators (such as SuperCharger) and crypto VC funds have also sprouted up around the city-state.
In addition, recent crackdowns on cryptocurrencies in China have sent a number of entrepreneurs across the border to neighboring Hong Kong, contributing to a growing pool of blockchain engineering talent. Hong Kong is also home to one of the largest crypto exchanges in the world in Bitfinex, which is headquartered here and remains quite active in Hong Kong’s crypto community.
As a global financial hub, funding in Hong Kong is abundant and generally accessible to founders. A variety of funding options are available, from venture capital all the way down to seed funding from independent accelerators and advisors.
In addition to an ample supply of funding, Hong Kong also benefits from a collaborative and open crypto community. Organizations like the Hong Kong Bitcoin Association and major crypto exchanges like Binance have fostered a vibrant community of founders in Hong Kong, which also hosts a number of key industry conferences each year (such as TOKEN2049 and others).
Like Singapore, Hong Kong has a regulatory environment that’s generally favorable to cryptocurrency firms. That said, there are a couple of caveats here that I’ll elaborate upon in the following section. Guidelines for setting up a business are clearly-defined, and cryptocurrencies have historically been lightly-regulated (although this is starting to change – more on that below).
Despite having an open and collaborative business environment, Hong Kong is starting to crack down on token sales that look suspect in any way.
As recently as this year, the central government said that it would begin looking at and regulating token sales as conventional securities, saying that it would “continue to police” cryptocurrency exchanges and token sales launched within its jurisdiction.
Although the central government is appearing to take a middle-of-the-road approach (in contrast to China, which has essentially banned cryptocurrencies completely), this has caused some founders to be wary about starting their crypto company in Hong Kong in the near-term.
In addition, Hong Kong’s government recently launched a public awareness campaign (spanning print, television, and online) warning its citizens about the potential dangers of investing in ICOs and cryptocurrencies. The impact of this remains to be seen, but in the long run, such a position towards cryptocurrencies may lessen investor sentiment over time.
What the experts say:
Cyrus Wen, CEO of Plutux Labs, shares:
While Hong Kong positions itself to be a prominent financial center in Asia, its regulators are not known to be immediately adaptive to emerging technologies, and prefer to be a follower rather than a first mover. As such, neither overnight crackdown nor deregulation towards cryptocurrency is expected from the regulators at this point.
Due to regulatory concerns over tax issues and money transfers globally, obtaining a bank account has become increasingly difficult in Hong Kong. This has been the case for any businesses, but far more so for finance-related sub-segments such as remittance companies as well as technology startups dealing in cryptocurrency.
It is worth noting that most of the top cryptocurrency exchanges by trading volume involve Hong Kong-based entities. After all, Hong Kong provides world-class business infrastructures and talent pool enabling many businesses to advance into the blockchain space.
- Index of Crypto Events in Hong Kong
- Hong Kong Bitcoin Association
- Bitcoin HK Meetup Group
- My list of crypto companies in Hong Kong you should get to know
San Francisco, California, USA
Why San Francisco?
As the de facto capital of Silicon Valley, it’s perhaps no surprise that San Francisco makes our list of the top places in which to launch a crypto company. With an unmatched concentration of engineering talent, close proximity to the hundreds of VC firms dotting the Bay Area, a culture of creativity, and an active crypto community, this city has all the ingredients critical to a healthy startup ecosystem.
Like any city, though, San Francisco isn’t perfect – most notably, it faces regulatory challenges as a crypto hub on account of it being located in the US. But despite these uncertainties, it remains one of the best cities for founders to set up a crypto company, and this will likely continue to be the case for years to come.
San Francisco is home to some of the most influential blockchain-focused VC funds in the world (such as Blockchain Capital), making it perhaps the best place in the world for founders to search for funding from institutional investors who truly understand the transformative nature of cryptocurrencies.
Funding of all types is plentiful in Silicon Valley, but in San Francisco in particular, extensive networking is critical to getting access to key dealmakers.
In addition to a significant amount of available funding, San Francisco also has perhaps the largest concentration of blockchain engineering talent of anywhere in the world. According to a Forbes study, it also has the second-highest number of blockchain-related job openings in the US.
The numerous crypto firms that have already set up shop here act as a significant magnet for talent and the allure of Silicon Valley is often difficult for many engineers to ignore. Founders setting up shop in San Francisco (or the greater Bay Area, for that matter) will certainly benefit from the deep crypto and blockchain talent pool in the region.
As one might expect in Silicon Valley, San Francisco also has a thriving blockchain and crypto community, with numerous events and industry conferences happening throughout the year. As an added bonus, some of the top VCs and startup advisors in the world (like Spencer Bogart of Blockchain Capital) remain very active in the community, offering founders numerous networking opportunities.
For now, ICOs and crypto companies launched inside the US (and consequently in San Francisco) will be subject to a high level of scrutiny from regulatory authorities. The Securities and Exchange Commission is watching developments in the crypto industry closely, and in recent weeks has resorted to calling the heads of suspect ICOs, many of which discontinued their token sales shortly thereafter.
In addition, there appears to be disagreement within the US government around how ICOs and cryptocurrencies should be regulated. The head of the SEC was recently quoted as saying “every ICO I’ve seen is a security”, but some lawmakers disagree.
This uncertain political climate (and the threat of having one’s crypto operations shut down altogether) has forced some founders to pursue launching their crypto companies in more supportive jurisdictions like Switzerland or Gibraltar.
What the experts say:
Andrew Lee, CEO of Purse, shares:
SF is not the most convenient place to start a company, but it is the frontier of innovation in crypto. Top developers for every major project reside or spend a lot of time in SF, and as a result, it has the highest density of intellectual prowess.
However, the market is very global and the majority of crypto companies don’t need to be at the edge of innovation. The most successful crypto businesses are actually based outside the US in cities like Beijing, Hong Kong, or Seoul.
- San Francisco Bitcoin Group
- San Francisco Crypto Meetup Groups
- Blockchain Economic Forum
- Crypto Jobs in San Francisco
- My list of crypto companies in San Francisco you should get to know
The UK overseas territory of Gibraltar is quickly becoming an attractive destination for crypto founders. Long a strategic outpost of the British Empire, this tiny territory sits astride the Strait of Gibraltar, which acts as the primary entrance for seaborne traffic in and out of the Mediterranean.
In recent years, its lenient regulations and low taxation have attracted entrepreneurs of all types, and the trend doesn’t appear to be slowing down anytime soon – particularly in crypto.
As the first territory to introduce and fully formalize government-sanctioned ICO regulations, Gibraltar is leading the way in normalizing the use of cryptocurrencies and ICOs within the global financial system. ICOs and token sales are completely legal here, with no ambiguity.
This guarantee of stability has emboldened crypto founders to set up shop in the territory, which now is home to the Gibraltar Blockchain Exchange, the world’s first government-backed crypto exchange.
Gibraltar is a world leader in building a business-friendly environment for crypto companies. It’s taking a market-driven approach to drafting regulations around ICOs and cryptocurrencies, and the Gibraltar Financial Services Commission (GFSC) has said in the past that it would like to create a “self-regulating environment” for token sales.
On February 9th, the territory announced that it had drafted the world’s first regulations for ICOs and that it would soon be issuing clear regulations on how cryptocurrencies could be used in investment funds as well.
This clear-eyed approach to cryptocurrencies benefits would-be founders, as there will likely be no ambiguity around the legality or corporate structure of one’s company, should it be domiciled in Gibraltar.
In addition, Gibraltar recently announced the launch of the Gibraltar Blockchain Exchange (GBX), which aims to provide an institutional platform for token sales, ICOs, and crypto exchanges.
The exchange is operating with the backing of the GFSC, and will provide crypto founders with a fully legal, legitimate, and a government-approved way to launch their projects or token sales. In a world where uncertainty around crypto regulations is the norm, this is a huge benefit.
Unlike the other cities on this list, Gibraltar has a tiny population and a dearth of blockchain engineering talent. As many founders are apt to fly in and do a day’s worth of business before flying out in the evening, the crypto community here is more transient and less active than some other cities.
Despite Gibraltar being a mini-financial hub, there’s also a general lack of access to funding within the territory’s borders – especially when compared to financial powerhouses like Singapore and Hong Kong. That said, there are still some high-quality events held here on an irregular basis (such as its annual Blockchain & Bitcoin Conference).
In addition, early this year, some British banks (most notably RBS) began refusing any crypto transactions originating from Gibraltar. Many British banks see cryptocurrencies as a dangerous investment bubble and are reluctant to process transactions related to them.
As a true innovator in the crypto space, some of this friction is to be expected in Gibraltar, but time will tell whether this resistance is temporary or symptomatic of a more long-lasting opposition to cryptocurrencies by the British government.
What the experts say:
Dmitrij Pruglo, CEO of COVESTING, shares:
COVESTING is heavily focused on providing a secure, and compliant platform for cryptocurrency trading. Cryptocurrency business incorporated in Gibraltar has to comply with the strictest standards of risk management, client asset protection, corporate governance, IT systems and controls, and financial crime prevention. So, the registration in Gibraltar can be seen as a sign of reliability.
Marcus Killick, CEO of ISOLAS LLP, shares:
DLT is a financial wild west, many participants will fail and many individuals will lose money. This is the risk they take for the rewards they seek. If you are going to be in the wild west it is best to be somewhere with a decent sheriff. Gibraltar’s regulatory environment will make it one of the few places where there is a sheriff in town to provide a level of protection.
- Gibraltar Blockchain Exchange
- GBX Facebook Community
- GBX Reddit Community
- Gibraltar Finance News and Events
- Gibraltar International FinTech Forum
- My list of crypto companies in Gibraltar you should get to know
In the past few decades, this former fishing village has risen to become one of the most prosperous cities, and one of the most well-connected transportation hubs in the world. Dubai has long been a hub for business in the Middle East, but it’s increasingly becoming a haven for crypto investors and founders as well.
The central government here is taking an openly experimental approach to crypto, and has already announced plans to roll out a national cryptocurrency and turn Dubai into the “world’s first blockchain-powered government”.
With its low tax structure, extensive access to capital, and an open-minded governmental approach to cryptocurrencies, Dubai has many of the critical ingredients for becoming a true global crypto hub.
As the Middle East’s most prominent business hub, Dubai is brimming with fresh capital and an investor community that’s increasingly interested in crypto. Several major crypto exchanges (such as AI-driven SaharaChain) are based here, and institutional investors are increasingly willing to invest in crypto and blockchain projects.
In addition to an active investor community, Dubai also houses a vibrant development community as well, with some of the brightest development talent in the region being based here.
Perhaps most promisingly for founders, Dubai’s government is prioritizing the adoption of blockchain technologies and is aiming to run its entire government on blockchain applications by 2020. The city government envisions blockchain underpinning every facet of daily life, including real estate transactions.
This initiative signals that the government is both willing and open to working with the right partners on crypto and blockchain applications, provided they’re relevant to the 2020 Initiative. Dubai, in particular, has taken a proactive approach to adopting emerging technologies and has entire accelerator programs set up to lure in promising tech talent (such as through the Dubai Future Accelerators Program, which is run by the Dubai Future Foundation).
For founders without proven and fully-funded crypto projects, cost of living is something to consider. Dubai is one of the most expensive cities in the world in which to live, which could give any entrepreneur bootstrapping their project significant challenges without any outside funding.
In addition, while Dubai has become more business-friendly in recent years, government regulations around incorporation can be byzantine and difficult to understand. Many regulations are not clear, and as such, setting up a business can be difficult without a local partner.
In addition, Emirati law generally requires at least one local partner be involved to establish a business – although there are sometimes ways around this depending on one’s unique circumstances by leveraging one of the many free trade zones.
What the experts say:
Luigi Menghini, founder of Dubai based DomusCoins, shares:
Dubai is for sure an interesting city in terms of business and growth possibilities. Taxes are almost zero. The approach towards cryptos is positive, but there is no legal framework yet and the UAE might implement strict regulations as it is already happening for banking and finance. In this case, established corporations will be advantaged compared to start-ups.
Last but not least, finding skilled software developers can be challenging, in fact, 90% of the employees is foreign and to be in the country they must have an occupation. This means that you’ll probably have to look abroad to set up a new team.
- Blockchain and Crypto Community Dubai
- Cryptocurrency in Dubai FB Group
- My list of crypto companies in Dubai you should get to know
Tokyo is the financial and business center of Japan, which is the world’s most active crypto trading market, with over 40% of the world’s crypto trading volume taking place in Japan last year. A number of the world’s largest crypto exchanges are based in Tokyo, and many blockchain firms also have regional headquarters located in town as well.
The world has long looked to Tokyo for first-mover innovations in the world of crypto, and its government has been more active than others in engaging with the technology.
After a spate of high-profile cryptocurrency thefts of some of the Japan’s largest crypto exchanges, the country has established a self-regulatory body focused on securing and regulating Japan’s largest crypto exchanges. This should boost both security and investor confidence in the markets while resolving the regulatory ambiguity that has long plagued the country.
Tokyo has one of the most active crypto communities in the world – in fact, researchers have estimated that over half of its adult population has purchased or traded cryptocurrency in the past two years. Many businesses and cafes accept crypto for payments, and the level of mainstream adoption here is on another level compared to the other crypto hubs on this list.
This is primarily due to crypto’s recently-minted status as a legal tender and its mass appeal in the Japanese market. There are a variety of meetups happening every night of the week for crypto entrepreneurs and investors from all walks of life, giving the city’s crypto community a more diverse makeup than other cities of a similar size.
As the largest city in what is arguably the world’s most crypto-friendly country, Tokyo is one of the best cities for crypto entrepreneurs to set up shop. In addition to a supportive regulatory environment, the country also has robust safeguards for both traders and investors, leading many to see the country as a “safe haven” for crypto (this was recently illustrated in Coincheck’s willingness to provide full refunds to its customers following an unprecedented $530m theft several months ago).
Tokyo has benefited from recent regulatory crackdowns on cryptocurrencies in China and South Korea, as many retail investors in those countries have transferred their crypto holdings (and the trading activity that goes with that capital) to crypto exchanges based in Tokyo.
Following the Mt Gox debacle, Japanese regulators have been extremely conservative about allowing crypto exchanges in the country, even banning them outright at one point.
Recently, the government allowed 11 of the country’s largest crypto exchanges to build a self-regulatory body, which seems to bode well for the future of crypto exchanges in Japan, but uncertainty remains around whether these regulations will be held up, or tightened up yet again if another Mt Gox-like event happens again. Given the past precedent for such actions, this is certainly a key consideration for founders thinking about setting up shop in Tokyo.
In addition, despite the high trading volume, Japan still is somewhat unfriendly to crypto investors due to its high-tax environment. This year, Japan’s government announced that it would be taxing proceeds from crypto at between 15 and 55%, depending on the amount of gains realized. This likely won’t impact crypto trading in the short-term, but the long-term impact of high taxation could dampen investor enthusiasm in the future.
What the experts say:
Gabriel Yang, COO of Tokyo based BeyondBlocks, shares:
Simply put, Japan is the “New Heart” of cryptocurrency. As of Jan. 15, Japanese yen accounts for 56.2% of bitcoin, the most popular cryptocurrency, according to coin hills.com.
Japan’s stronghold on No.1 position is owed to a solid legal system supporting the industry to build credibility among individual investors, as well as Japanese familiarity with securities trading, said Midori Kanemitsu, the CFO of Japan’s largest cryptocurrency exchange operator, bitFlyer Inc.
Japan is also the first and only country to establish a proper legal system regulating cryptocurrency trading, eliminating the worry of what would happen to users’ money if an exchange were to crash or go bust. We also can’t ignore the Japanese familiarity and expertise in day trading, another reason why the nation is a driving force for cryptocurrency development.
Dennis Jarvis, VP of Product at Orb, Inc, shares:
While other countries have been tightening regulations lately, the Japanese government has done a very good job of taking a balanced approach to protecting consumers versus encouraging innovation. As a result, more and more startups are moving to Japan to take advantage of the friendly regulatory environment.
I believe this will, in turn, attract more developers and crypto talent in general to the marketplace. One thing to note though is that English is not as widely spoken in Japanese business environments as it is elsewhere. Managing a multi-national team requires a sustained effort in bridging cultural and linguistic divides. In the end, though, it is more than worthwhile to be part of such a vibrant crypto community.
- Tokyo Bitcoin Meetup Group
- Tokyo Ethereum Meetup Group
- Blockchain Business Camp Tokyo
- Blockchain and Cryptocurrency Conference Tokyo
- My list of crypto companies in Tokyo you should get to know
With the lowest corporate tax rates in the European Union, an innovation-friendly government, and a tropical climate, Malta is fast becoming a key hub for crypto firms. Recent crackdowns on crypto in China and Japan have left many firms looking for a new home base, and Malta is increasingly stepping in to fill that role.
Even Binance, the world’s largest crypto exchange, has moved its headquarters here on the heels of increased regulatory pressure in Japan and Hong Kong.
With its progressive attitude towards cryptocurrencies and blockchain technology, Malta’s government is being proactive about adopting crypto entrepreneurs. It recently set up the Malta Digital Innovation Authority to certify blockchain platforms set up in the country, as well as verify all crypto transactions.
The authority is also set to issue formal regulations around ICOs, which is giving crypto entrepreneurs increased confidence in the viability of setting up their own businesses in Malta.
The creation of the Malta Digital Innovation Authority has given investors confidence that the central government is serious about becoming a magnet for crypto talent from around the world. This measure, aimed at giving crypto entrepreneurs “peace of mind”, will also involve defined regulations around ICOs and definition of the roles of intermediaries within the crypto markets.
In addition to a progressive regulatory environment, Malta also has the lowest corporate tax rate in the EU, with some individuals and corporations able to pay as little as 0% tax on their profits. As Maltese law is presently ambiguous regarding how its corporate tax rate applies to crypto firms, this tax rate is certainly subject to change – but for now, it remains a huge draw for the many crypto startups that have moved their operations here.
Malta’s crypto community is still nascent, but with significant players like Binance moving in, the diverse community here is quickly growing. Regular meetups take place within groups like the Malta Bitcoin Club, and one community of crypto entrepreneurs has even created ICO Malta, a turnkey service for founders looking to incorporate and launch their ICO within the country. After welcoming Binance into the country, it seems likely that Malta may begin looking for other prominent crypto firms to lure to its shores, although it remains to be seen if any additional incentives will be provided.
As of right now, the only true disadvantage of Malta is merely that it’s mostly unproven as a crypto hub, and despite having been a hub of offshore finance for years, its banking systems haven’t been stress-tested quite as much as in some other countries.
This leads some to believe that the country may run a risk of being caught off-guard by a black swan event (such as the notorious 2014 Mt Gox scandal) that would damage the country’s pristine reputation in the crypto community. Some long-timers in Malta’s finance sector also believe that the government’s openness to crypto is superficial at best, and hasn’t been truly thought through in-depth from a regulatory perspective.
In additional, cryptocurrencies are presently still classified as “unregulated digital instruments”, meaning that funds deposited by firms on Malta’s shores may or may not be insured by the government. Regulation isn’t yet clear on this point, and some entrepreneurs may opt to hold off on setting up shop until the finer points around insurance of funds have been cleared up by Malta’s Digital Innovation Authority.
That said, regulatory ambiguity is something that should clear up during the upcoming year, as the MDIA continues to ramp up its focus on making Malta an attractive place for crypto entrepreneurs to do business.
What the experts say:
Jan Sammut, CEO of ICO Launch Malta, shares:
Malta is shaping up to be the ground-zero of blockchain innovation in Europe. The strategic nexus between a highly skilled technical workforce, pro-business government and efficient tax structures whilst being a fully fledged EU and Eurozone member make it the obvious choice for blockchain start-ups. Also, never discount the advantage that the climate and lifestyle here offers when recruiting and relocating staff members from the northern countries.
- Bitcoin Club Malta Facebook Group
- Blockchain & Bitcoin Conference Malta
- Malta Crypto Meetup Group
- My list of crypto companies in Malta you should get to know
As anyone involved in crypto already knows, the regulatory landscape is constantly changing, and any country that’s open to cryptocurrencies today could easily swing the other way at any given time.
Such regulatory uncertainty makes choosing the right place to incorporate one’s crypto company all the more important. At present, it’s impossible to completely eliminate regulatory risk when setting up a crypto company, but one can minimize it by choosing a jurisdiction with a stable government and an optimistic approach to cryptocurrencies.
At present, I believe the five cities on this list have the most stable environments for setting up a crypto company or launching an ICO. None of them are perfect, but the risk profiles of all five are much lower compared to other crypto hubs around the world where the regulatory uncertainty is a bit more pronounced.
If you’re interested in crypto, be sure to check out CryptoList – my hand-researched list of crypto companies, and consider subscribing to CryptoWeekly, my weekly crypto newsletter covering the week’s must-read blockchain news.