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Initial Coin Offering in the Isle of Man

Initial Coin Offering in the Isle of Man

The Isle of Man has a regulatory environment that is supportive of initial coin offerings. An ICO, the initial coin offering, is a manner of gathering capital by selling for the first time a type of virtual currency or cryptocurrency coin (also called a token). The funds raised in this manner can be used for multiple purposes, most commonly to develop blockchain technology or as the company raising the money sees fit.

Offshore company formation in the Isle of Man is attractive for many investors particularly because it is located close to Europe and it offers a tax neutral regime. Investors can open a company here that engages in cryptocurrency and/or blockchain activities and enjoy the favorable business regime and the fact that cryptocurrency companies are under a favorable, albeit controlled, treatment.

Investors who wish to know more about the general process for Isle of Man company formation can reach out to our specialists. We can assist investors who wish to open a cryptocurrency company.

Is an ICO a type of regulated investment in the Isle of Man?

No. An initial coin offering does not fall into the Regulated Activities Order 2011 and it is not an investment as per the purposes defined in the Financial Services Act. the protection that investors can benefit from for traditional investments does not apply in the case of those who purchase tokens in an ICO.

What is offered in ICO in the Isle of Man?

An initial coin offering is a manner of raising capital for a project by selling tokens, the new digital currencies. Interested third parties can acquire them in exchange for money and they can also have other benefits, such as discounted rates for the company’s products or services or premium access to some software, as per the company’s profile.

What laws need to be observed during an ICO?

The Isle of Man Financial Services Authority (FSA) regulates businesses involved in cryptocurrency activities. However, the FSA does not have the authority to investigate any complaints that may arise regarding ICOs. Companies are required to maintain a sufficient presence on the market and need to have at least two directors who are residents. Moreover, these companies must be managed and controlled from the Isle. Investors should also know that they are required to comply with the Anti-Money Laundering and Counter Financing Terrorist Act. 

A virtual currency business is required to register under the Designated Business Act, however, it will not be supervised by the FSA in the same manner in which a bank would be. A business that is registered under this Act is also expected to take reasonable steps to verify its customers.

One of our Isle of Man company registration specialists can provide investors with more details on the Designated Business, as per the regulations in force.

Why is the Isle of Man a good location for an ICO?

Investors who are interested in setting up a company in the Isle of Man, for the purchase or opening a cryptocurrency business or for the launch of an ICO, have the following advantages: 

  • Tax-free: this jurisdiction is preferred because it imposes no income tax, capital gains tax or corporate tax.
  • Stability: the Isle of Man is economically and politically stable, an advantage for a foreign investor.
  • Easy company formation: setting up a company in the Isle of Man is a simple and fast procedure; an expedite incorporation method also allows investors to register the business in the same day.
  • Positive legislation: the Isle of Man is one of the locations in Europe that have expressed a positive attitude towards ICOs and cryptocurrencies in general.

According to the Department for Enterprise, the following statistics apply to companies in the Isle of Man:

  • at the end of 2017, there were 17,090 companies registered according to the 1931 Act;
  • also at the end of 2017, 9,570 companies were registered as per the 2006 Act.
  • in September 2019, the number of 1931 Act companies was 15,982 and there were 9,530 2006 Act companies.

Investors who wish to start a cryptocurrency company can reach out to our agents for complete information on how to register a 2006 Act legal entity. We can also assist investors who wish to register existing cryptocurrency companies under the Designated Business Act. 

Our team also includes a CPA in the Isle of Man, who is ready to answer any questions about the yearly documents that do need to be prepared and kept by companies, despite the fact that there is no need to file these documents as the annual financial statements would be filed in other jurisdictions. You can always reach out to us for more information about our services and solutions for companies.

For more information on Isle of Man company formation, please do not hesitate to contact us. Our agents are able to assist investors who wish to open a company throughout all of the company formation steps. We provide complete incorporation packages, suited to the investor’s business needs.