The terms of registration and operating are flexible for business and also related to many benefits.
Advantages of jurisdiction
The decision to issue a license for the cryptocurrencies exchange on the Isle of Man would bring many benefits:
- ease of registering process and opening a bank account;
- very favorable taxation conditions;
- asset protection;
- developed infrastructure, including telecommunications.
The regulation covers any activity concerned with the issuance, transfer, storage service, management, purchase, sale, pledging, trading, and mediation services regarding convertible virtual currencies, including cryptocurrencies or similar funds.
Cryptocurrency is a convertible currency that can be traded for fiat currencies directly or through an exchange. Also, the rights to it can be transferred from one person to another.
If a crypto asset implies receiving income, profit, or capital gains, then related operations require a license, given that such assets have characteristics of securities. If it provides access to services or is a measure of value, then regulation regarding financial services does not apply and only the regulator needs to register – the Isle of Man Financial Services Authority.
The regulator takes the view that neither registration nor obtaining a license is required in cases of software development or the use of crypto assets as a unit of calculation. Such activities are not considered regulated.
How to register a crypto license on the Isle of Man
The regulatory treatment of a particular crypto asset depends in large part on whether or not it is a security. If, for example, a cryptocurrency exchange works with cryptocurrencies that do not have any signs of securities, then the license is not required. Passing the registration procedure will be enough to start the activity. If the exchange works with crypto assets that have signs of securities, then such licensing is necessary. The regulator defines securities as stocks, bonds, derivatives, as well as shares in collective investment schemes.
The specific format for the procedure is determined by the class of regulated activity. The general requirements are:
- creation of a business plan with a detailed description of the proposed types of transactions;
- development and implementation of policies for monitoring transactions and fighting money laundering;
- compliance of shareholders and staff with the requirements of the regulator regarding the reputation;
- availability of financial assets;
- implementation of security systems.
A mandatory aspect of Isle of Man crypto license regulation is compliance with the requirements of anti-money laundering legislation:
- development and implementation of procedures for identification and collection of customer data;
- determination of beneficial owners;
- all transactions monitoring;
- formation and keeping of records of transactions;
- submission of compliance reporting;
- informing about cases of suspicious transactions.
The taxation conditions are more than favorable. There is no corporate tax, capital gains tax, or dividend tax in the jurisdiction.