Cryptocurrency projects in Gibraltar

Cryptocurrencies have been widely known for years, so many countries have already expressed their attitude and enforced some laws in relation to them. Gibraltar is one of the countries that tends to support cryptocurrency projects. Whether it is an ICO or a crypto exchange, one should not be afraid of anything if the requirements set by the Gibraltar Financial Services Commission (GFSC) are met. Crypto licenses in Gibraltar are very helpful for doing business here, because they guarantee stable legal business operations of blockchain-related companies.

Legislation related to the regulations of cryptocurrencies

There are different ways of treating cryptocurrencies. Depending on a legislation of a country, are treated as money, property, or virtual assets as securities. The legality of cryptocurrencies in Gibraltar has been a matter of disputes, and this country started working on regulations back in 2014. As of today, Gibraltar’s legislation is focusing not on cryptocurrencies themselves, but on the distributed ledger technology and its providers. This allows to capture various blockchain and other kinds of DLT projects under one legislation which makes the regulations more universal.

Regulation of cryptocurrency and blockchain projects in Gibraltar is done by the GFSC (Gibraltar Financial Services Commission). On October 12 in 2017, the GFSC enforced the Financial Services Act. It is the main crypto law in Gibraltar. This law is both supporting new blockchain projects and reducing the risks of investors being scammed. To comply with the law, any company that uses distributed ledger technology has to obtain DLT license that grants permission to provide various services.

Working with cryptocurrencies in Gibraltar and obtaining the DLT license

DLT license is what allows blockchain projects to operate legally in Gibraltar. To obtain the crypto license for work with cryptocurrency, a project needs to submit an initial application, which will cost £2,000. After that, the GFSC will evaluate the project and make a list of requirements that the company has to meet. This procedure to obtain DLT license in Gibraltar might take time. To simplify the process, assistance on the following stages can be helpful:

• Reviewing the business plan;
• Preparing the initial application;
• Editing the application based on the feedback received from the GFSC;
• Submitting the final application and making a presentation for the GFSC.

To obtain DLT license, the DLT Provider (the applicant) needs an understandable and honest business model that enables efficient communication with customers, detects financial crime risks, possesses the needed resources to meet its goals and protects its clients from taking unnecessary risks.

This crypto license has to be maintained by paying annual fees. Obtaining DLT license can seem as a costly procedure, but it guarantees protection from various charges that blockchain companies are often obliged to pay, because of the uncertain status of their business in other countries.

Taxation of cryptocurrency projects in Gibraltar

Cryptocurrency taxes vary from country to country and often depend on income. In Canada, the taxes are between 25% and 50%. In Japan, taxes for cryptocurrency operations vary from 15% to 55%. Taxes in Gibraltar for cryptocurrency projects are among advantages of doing business in this country. Cryptos as such are not subject to taxation, so crypto-related projects only have to pay a 10% corporate income tax. Moreover, capital gains and dividend are not subject to taxation. Moreover, in case there is some foreign-source income that came from the company’s activity that is not related to what DLT license covers, this income can be tax-deductive as well.

If 10% is too much for your business, there are some tax credits and incentives for startups in Gibraltar. You must meet specific requirements to be eligible for them, so doing research or considering an adviser is recommended.

Operation of crypto exchanges in Gibraltar

Operating a crypto exchange in Gibraltar requires the DLT license. The procedure of obtaining a crypto exchange license is thus the same as for any other project that involves blockchain technology. This is a time-consuming and difficult process of proving the legitimacy of your business. You also have to prove that it truly operates from Gibraltar (you need an office and the main team members in this country to meet this requirement).

Of course, it is still possible to start an exchange without any license in other countries which might look as a better solution. However, this will lead to constant risk of being charged for illegal operation as well as difficulties with financial services.

Gibraltar’s government openly supports crypto businesses, so registering cryptocurrency exchange in Gibraltar is probably worth it. Apart from legit activity, crypto exchange license simplifies operations of depositing and withdrawing fiat money on the exchange, which is usually problematic and even requires a separate electronic money institution license in some countries.

Launching an ICO in Gibraltar

While ICO regulation legislation is currently under development, one can easily launch an ICO as a distributed ledger technology provider. Thus, holding an ICO in Gibraltar is safe if you have a license for blockchain project, provided by the GFSC.

Among the difficulties of launching ICOs in Gibraltar is uncertainty about the future, since it is unclear how the developing ICO legislation will regulate such projects. Apart from that, additional licensing fees that range from $11,000 up to $39,000 are a potential obstacle. However, as initial coin offerings usually aim for soft cap around at least $1,000,000, the fees are relatively low. To make sure that your project is not overcharged, you might consider seeking for financial assistance.

The main benefit of choosing Gibraltar for an ICO is that you don’t have to fear sudden lawsuits or scam accusations simply because ICOs have shady reputation. Moreover, the government supports both crowdfunding and cryptocurrencies, so with DLT license Gibraltar is a great country for an initial coin offering.