Where to best register a cryptocurrency business

Crypto Upvotes experts told which jurisdictions are comfortable for cryptocurrency to live and work in. And also told what factors determine the choice to register a crypto project in the chosen region

The regulation of cryptocurrencies around the world ranges from a complete ban on digital tokens to their recognition as legal tender. From time to time, governments pass laws that force crypto-businesses to migrate.

For example, China’s 2021 ban on cryptocurrency mining caused a mass exodus of miners from China. In 2023, due to stricter regulation in Canada and the U.S., many exchanges stop operating there. And now they are moving to countries in Asia and Europe. Binance and Bybit have already announced their departure from the Canadian market, Coinbase plans to open an office in Dublin.

On the other hand, certain regions are adopting clear regulatory rules for the crypto industry. And this also attracts cryptocurrencies. Hong Kong has allowed retail trading of digital assets since June 1. Huobi, Gate.io, OKX and many other exchanges are already entering the local market. Gemini and Bybit are opening offices in Dubai, while Binance has been operating there since last spring.

Most projects choose two simple rules simply and cheaply

Any cryptocurrency startup wants to cut costs as much as possible at the initial stage. This includes legalization of their activities.

For a cryptocurrency company, registration and licenses are primarily needed to interact with the outside world. For example, to place their applications in the App Store or Google Play. Or opening corporate accounts on major exchanges, our expert explains.

The most important criteria for selection are three parameters:
– Ease of opening a legal entity (ideally distant registration).
– Speed (ideally a few days)
– Price, which does not exceed a few thousand dollars.

As a bonus may be the presence in the company’s charter of the prescribed cryptocurrency activity. And especially in jurisdictions where obtaining a cryptolicense is impossible or not required. Because this process usually requires much more time and expenses than the registration itself.

Popular jurisdictions for crypto business registration

It is because of the speed, simplicity and low-cost of doing business that regions such as Georgia or the Seychelles are popular. Because these countries win in comparison with, for example, Dubai or Hong Kong. So there everything is a little bit more complicated, longer and more expensive.

The most favorable jurisdictions are the ones that support the crypto market. And they have special regulation and, in addition, they provide preferential tax treatment for such businesses. The most obvious example of such a region is Dubai. In addition, the Arab Emirates is relatively neutral in the international financial market in terms of various geopolitical aspects.

Our experts point out that Hong Kong, Switzerland and the Netherlands also have a positive attitude to cryptocurrency business. And they have regulation, but their taxation regime is not as favorable.

There are countries that are not against cryptocurrency. But at the level of regulators they warn both businesses and consumers about the high risks of such assets (e.g., Georgia). Such jurisdictions, as a rule, are against the use of cryptocurrency on their territory. And especially use as a means of payment.

Some cryptocurrency exchanges choose Ireland’s capital Dublin for the fact that the country is part of the EU. And has an established reputation as a financial and technological center. It also provides a favorable tax regime for its residents.

Our experts note that Dubai, Hong Kong and Georgia are increasingly in the news as cryptocurrency-friendly regions. But not just because they are somehow particularly favorable to cryptocurrencies. Rather, it is because they are generally friendly to relocating businesses, including cryptocurrency businesses.

There are no special preferences for cryptocurrency projects. As well as there are no prohibitions preventing the activities of cryptocurrency companies. Practice shows that the absence of bans is enough. To attract a significant number of companies in the current situation. Who are looking for their new place to work.

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Dubai strengthens control over crypto-businesses in order not to become a global center for money laundering

Regulators in Dubai intend to bring local companies and major exchanges into the legal sphere. At the same time securing the region from illegal cryptocurrency transactions

After the FTX exchange went bankrupt last November, regulators in Dubai are tightening their grip on the crypto business. This followed the closure of a number of illegal cryptocurrency exchanges, and now officials at the Dubai Virtual Asset Regulation Authority (VARA) have started sending out requests for information to cryptoservices operating in Dubai.

What are the Dubai authorities doing and what are the consequences for crypto business

The authorities in Dubai have to find a balance between encouraging innovation. And the need for proper oversight of the crypto industry. One of the experts interviewed, who advises fintech companies on expansion in the Gulf region. Says the regulator intends to turn Dubai into the capital of the digital economy. And while retaining business ties with Western jurisdictions and not causing complaints from them.

The Middle East, represented by the UAE, is trying to strike a balance between remaining an attractive region for investment. And not to become a “global laundry”. Given the recent trend and the claims to the region by the international community.

The United Arab Emirates, of which Dubai is a part, has already cracked down on dozens of cryptocurrency exchangers that opened there without licenses. Our experts point out that this was part of a broader program to remove the UAE from the FATF’s gray list.

This trend is related to the authorities’ growing concern about the risks associated with the use of cryptocurrencies. Such as fraud, money laundering and terrorist financing. As a result, authorities are seeking to tighten regulation and oversight of companies. That deal with cryptocurrency transactions.

What controls the Dubai authorities plan to launch

Among the specific measures Dubai authorities could take. Our experts call for stricter licensing requirements for crypto-businesses. Such as more thorough verification of financial statements and strengthened compliance procedures. In addition, it is possible to increase fines and other sanctions for companies that violate the rules related to operations with cryptocurrencies. And in particular with ICOs. In general, these measures are aimed at increasing the transparency and reliability of operations with cryptocurrencies. And also to reduce the risks associated with these transactions.

The UAE has already received questions from the FATF in the context of the possibility of the country to be blacklisted. This was due to insufficient compliance with anti-money laundering measures, according to the regulator. The agency published evidence that the country directly and indirectly helps oligarchs evade Western sanctions. And this includes through cryptocurrency transactions. The country is currently on a gray list. Therefore, they do not need to be regulated, our experts believe.

Binance and other major exchanges are under supervision of the authorities

The world’s largest cryptocurrency exchange, Binance, has also faced inquiries from VARA. Its head, Changpeng Zhao, himself lives in Dubai and is working to make it the center of brand expansion in the Middle East.

The Dubai regulator is requesting more data from Binance than from other market participants. The agency is reviewing information on ownership structure, audit reports and governance procedures at the global group level. The process is complicated by the fact that Binance does not have a single headquarters. And instead of a board of directors, the usual form is a global board of experts. In addition, the exchange has a complex corporate structure, including several holding companies. And many legal entities in different regions. Representatives of Binance said that they had submitted to VARA a full set of data on requests. That included the results of an audit of the local unit.

In addition to Binance, the public registry of virtual asset service providers at VARA lists four other companies with licenses: Komainu, Hex Trust, GC Exchange and Crypto.com exchange. The latter, like Binance, has provisional minimum viable product (MVP) approvals. This means they cannot yet offer cryptocurrency-related services in Dubai. Which are officially regulated by local law.

All issued licenses are temporary, our experts explain. Obtaining higher level licenses will only be possible after the necessary changes in the legislation are adopted.

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