Pros & Cons: How do you choose which crypto-friendly jurisdiction to start your company in?

If you’re in the process of starting a blockchain company, then you’ll need to pick the jurisdiction that will give you the right opportunities to become successful and earn profits. To make a decision regarding which jurisdiction to chose and what pros and cons exist, I’ve asked lawyers who specialize in crypto as well as crypto founders about the pros and cons of choosing one crypto-friendly jurisdiction over another. If you’re interested in more specialized questions, like which jurisdiction should you choose for an STO, then you can read more here: [STO/ICO legal services](https://medium.com/geekforge-academy/sto-ico-legal-services-86a4bef06a35) Here’s how everyone answered. (This topic is part of the #10kqachallenge series, where I’m interviewing experts in different fields. Our goal is to reach out to and interview 10,000 experts. More about the challenge can be found here: [formula.geekforge.io](http://formula.geekforge.io)) For each jurisdiction I included quotes from several experts who, in my opinion, are the most useful in terms of information provided. Jurisdictions that are discussed: 1. [**Malta**](#8f6d) 2. [**USA**](#b7e9) 3. [**Switzerland**](#05e9) 4. [**Gibraltar**](#ceed) 5. [**Canada**](#fca0) 6. [**Lithuania**](#1087) 7. [**Estonia**](#5b61) 8. [**Israel**](#aa57) 9. [**Singapore**](#25cb) 10. [**Hong Kong**](#435c) 11. [**United Arab Emirates**](#44fe) 12. [**Japan**](#7c50) 13. [**Korea**](#8318) Please note that these interviews have been edited only for grammar and spelling. ### **Malta:** [**Paul Felice**](https://www.linkedin.com/in/paul-felice-mamotcv/) **— Lawyer at** [**Michael Kyprianou Advocates**](http://kyprianou.com) _The legal framework created by the recently promulgated laws regulating the blockchain and crypto industry in Malta gives entrepreneurs the benefit of launching their projects in a jurisdiction which has prepared itself for the unavoidable challenges brought about by an industry which is still in its infancy and which other jurisdictions are yet to venture in. The new laws have been modeled in a manner which promotes business development whilst maintaining market integrity, ensuring transparency, and consequently and most importantly, protecting investors. Incorporating a company in a jurisdiction which potential investors trust will undoubtedly contribute to the success of the project. The only cons that come to mind are the lengthy licensing process and the fact that banking may be a bit difficult. However, this is a problem which is currently being addressed by several new payment service providers and is thus by no means an insurmountable obstacle. Finally, the fact that Malta’s corporate tax rate is as low as 5% when the correct tax structures are implemented is an undeniably huge advantage for companies looking for the perfect environment to launch their projects._ #### [**Beppe Degiorgio**](https://www.linkedin.com/in/beppedegiorgio/) **— _Commercial lawyer at_** [**_GANADO Advocates_**](https://www.ganadoadvocates.com/) _Besides the favorable corporate tax regime in Malta, Malta’s blockchain laws promote a voluntary certification system will hopefully translate into an effective, tailored form of financial regulation, whereby market participants would be able to choose the most suitable regime for their businesses. Furthermore, a new competent authority (the Malta Digital Innovation Authority) has been specifically set up to oversee technology arrangements in Malta and to support the development of Malta as a center of excellence for innovative blockchain and AI initiatives._ _Another major advantages for setting up in Malta is the implementation of a bespoke “financial instrument test” which bestows the competent authority the power to introduce a legal filter, applicable to issuers, agents, and service providers (such as crypto exchanges, brokers, custodians, etc.) for the purpose of determining whether a DLT asset qualifies as electronic money, a financial instrument, virtual financial asset or virtual token. This new regime safeguards investors’ rights by providing a blueprint for the minimum disclosure requirements (in terms of content and format) applicable to ICO whitepapers, and by outlining the manner in which advertisements and marketing relating to virtual financial assets are to be carried out and to establish whether a service provider in this space requires a licence from the financial services regulator in Malta or otherwise._ #### [**Jonathan Galea**](https://www.linkedin.com/in/jonathan-galea-5421419a/) **— Managing Director of** [**Blockchain Advisory**](http://www.bca.com.mt) _Malta’s main selling point is that it remains, to date, the only jurisdiction in the world to offer a comprehensive regulatory framework surrounding the utilization and development of distributed ledger technology. We have not just introduced a framework regulating the financial side of the blockchain, namely exchanges and ICOs, but are also the first in the world to set up a regulatory authority which ensures that the technical quality of DLT systems are up to standard. Like all other jurisdictions, banking facilities remain an issue, but hopefully with the introduction of legislation, the banks will be more amenable to regulated business._ #### [**_Mario Frendo_**](https://www.linkedin.com/in/mariofrendo/) **— Lawyer at** [**Gonzi & Associates**](http://gonzi.com.mt) _Being one of the first jurisdictions in the world to comprehensively regulate the area of distributed ledger technology, Malta has gained a lot of attention from enthusiasts in this field. With an advantageous corporate and tax structure, a business-friendly mindset and a pro-active working force, Malta solidified its position within the EU as one of the most forward-looking countries in this respect — and moved to regulate not only “virtual financial assets” (cryptoassets) but the wider notion of “innovative technology arrangements” too. For startups and smaller entities, professional and regulatory fees, and other specific costs and disbursements may be perceived as a burden one would rather do without. But in relocating your business to Malta, you can be rest assured of a reliable stamp of approval certifying your blockchain venture._ #### [**Tessa Schembri**](https://www.linkedin.com/in/tessa-schembri/) **— Trainee Lawyer at** [**WH Partners**](http://whpartners.eu) _Malta remains the first European Union jurisdiction to introduce holistic legislation applicable to the blockchain ecosystem and its various use cases. Malta is already the jurisdiction of choice for many large players in the blockchain industry and is further establishing itself as a hub with the ideal ecosystem for such businesses to thrive. The Maltese jurisdiction supports a pro-business environment buttressed by a well-balanced legal and regulatory framework. Over and above, Malta is strategically positioned for international business, offering excellent tax planning opportunities._ _Unfortunately, the lack of support by local banks willing to onboard blockchain companies in Malta remains an obstacle towards the “Blockchain Island” fulfilling its true potential._ ### **USA:** #### [Robert Mao](https://www.linkedin.com/in/robertmao/) — Founder & CEO at [ArcBlock](https://www.arcblock.io) _The ultimate benefit of building a blockchain startup in the US is joining the cutting-edge tech community here. Blockchain technology is still in the early stage, so it’s really important for a startup to have a great deal of talented engineers and like-minded people around you. ArcBlock is a foundation blockchain application platform, we place ourselves in the tech center of Seattle, with all those cloud-computing giants and blockchain startups just steps away. It’s an unbeatable advantage from the engineering side._ _The flip side is the cost, from hiring to legal, compliance and finance, everything would be more expensive, compared to building a team in Europe or Asia. But I would say it is worth it to stay close to the technology center, and Seattle is probably a better place for blockchain startups compared to Silicon Valley._ #### [**Jeanne Solomon**](https://www.linkedin.com/in/jeanne-solomon-3919805/) **— Partner at** [**CKR LAW LLP**](https://www.ckrlaw.com/) _I think it depends on the company’s specific business within the blockchain/crypto space, and where the company intends to operate, whether it makes sense to incorporate in the US._ **_Pros:_** _If the company plans to do business in the US, it can be easier to incorporate in a US state; and many investors like to invest in US entities, so those are some significant reasons to incorporate in the US. And some US states are becoming more blockchain-friendly; for example, Wisconsin has various existing and pending legislation that promote the blockchain. Delaware has also adopted some blockchain-friendly legislation, and there are other states that are worthy of consideration for incorporation._ **_Cons:_** _US incorporation would include potentially higher taxes (depending on the alternative jurisdictions being considered) and potentially extra costs of incorporating in the US._ ### **Switzerland:** #### [**Franz Alberini**](https://www.linkedin.com/in/franz-alberini-6124731/) **— Managing Partner at** [**Lance Partners**](http://lancepartners.com) **_Pros:_** _First of all, Switzerland has been at the forefront of blockchain regulation since the beginning, with the issue of the ICO Guidelines of February 2018 and the following FINMA papers. Then, Switzerland is one of the most stable countries in the world and in a period of deep uncertainty within the European countries, companies and entrepreneurs can enjoy the benefits of easier planning for their businesses. Switzerland has also one of the strongest and stable economies in the world, with a really high standard of living for people. Moreover, the small size of the country allowed it to create a system in which people can establish a direct relationship with governmental bodies and authorities. In fact, in all the papers distributed by FINMA, SBA, and other institutions, it is well highlighted that operators can directly contact the relevant authority for their business and that in most of the circumstances it is the same authority that led them in the course of the activities, granting them full compliance with the laws. The last point to be considered concerns the fact that, if in Switzerland companies can benefit from a low taxation in basically all the cantons, the Zug Crypto Valley provides a fixed taxation for blockchain companies equal to 14.6%._ **_Cons:_** _Entrepreneurs and companies interested in basing in Switzerland must deal with really high corporate costs, such as renting an office or paying the salaries of its employees. Moreover, it must be considered that if from one side having the possibility to easily face directly with the institutions is a big opportunity, from the other side this brings with it a further increase in costs. The same argument can be applied to regulation. If from one side having certain guidelines and fixed points provides certainty from a legal perspective, from the other side it means more fulfillments to be respected and, consequently, more costs for companies._ #### [**Gregory Clerc**](https://www.linkedin.com/in/gregory-clerc-ll-m-tax-1462797/) **— Tax Lawyer at** [**Oberson Abels SA**](http://obersonabels.com) **_Pros:_** _\- Switzerland has probably the most extensive experience in blockchain/crypto companies._ _\- Favorable tax and financial regulations_ _\- Very stable political environment_ _\- Positive environment for investments_ _\- With the “Tax reform and AHV financing” (normally for 2020), the companies’ tax rate for the profit tax should decrease drastically (especially for certain cantons as Geneva)_ **_Cons:_** _\- More regulation in comparison with other states. However, we think that regulations are essential and the one in Switzerland are very encouraging_ _\- Capital gains from commercial wealth are taxed_ #### [**Gregory Aillaud**](https://www.linkedin.com/in/gregoryaillaud/) **— Blockchain Lawyer at Swiss Blockchain Legal** _Switzerland offers a stable and consistent jurisdiction with a favorable tax environment, in circumstances where FINMA, the regulator, is relatively approachable and can guide operators towards a compliant project. Overall, we find that FINMA chooses to enforce by educating vs. a more aggressive approach of enforcement by repression, as we currently see in certain jurisdictions, sometimes even retroactively._ _Tax should not be the primary element in selecting the appropriate place of incorporation. Serious projects should first consider where they want to operate and where their market will be. The FINMA Guidelines issued in February 2018 were instrumental in placing Switzerland at the top of crypto nations, however, the legislator will need to step up in order to follow pace with countries like Australia and hold a pole position._ #### [**Emiliano Cordoba**](https://www.linkedin.com/in/emilianocordoba/) **— Independent International Lawyer** _There is a huge crypto community and specialized firms with a large, high-quality talent pool. The Crypto Valley Association, an organization dedicated to turning Switzerland into a world leader in the crypto and blockchain, hosts events and communicates with the government to improve legislation. The so-called “Crypto Valley” (Zug) is home to Ethereum, Tezos, and Monetas._ _A significant benefit of setting up crypto companies in Zug is its tax rate, which is minimal for crypto companies._ _Switzerland published its guidance notes for ICOs in February 2018 and introduced in 2019 a special FinTech licence. Four of the ten biggest ICOs in 2017 were incorporated in Switzerland._ _The only cons I would say are living costs and fees of professionals, banks are also still reluctant to open accounts for crypto matters and ICOs although this is slowly improving._ _I also wrote an article on ICO’s:_ [_https://citywire.ch/news/legal-brief-what-you-need-to-know-about-icos/a1121818_](https://citywire.ch/news/legal-brief-what-you-need-to-know-about-icos/a1121818) #### [**Yves Nespeca**](https://www.linkedin.com/in/yvesnespeca/) **— Partner at** [**NGS Rechtsanwälte AG**](http://ngs-legal.ch) _The current legislation in Switzerland is crypto-friendly and further positive developments are expected. A huge know-how has been accumulated by (serious) advisors who can effectively help to implement projects from a legal, but also technical perspective. There is a big community of crypto startups and the information flow is very good. Swiss authorities on various levels are already familiar with crypto in general and interactions are quite straightforward. Last, but not least, Switzerland has a very favorable tax framework. As a drawback, I probably have to mention that FINMA is not always fast in delivering answers to submissions._ ### **Gibraltar:** #### [**Marc X. Ellul**](https://www.linkedin.com/in/marc-ellul-ba734a28/) **—** Managing Partner of [Ellul & Co](https://www.ellulco.com/practice-area/fintech) **_Pros:_** _Gibraltar is a crypto-friendly jurisdiction with professionals and banks who understand the space._ _We were the first in the world to introduce laws and a comprehensive framework to regulate blockchain businesses. This is the DLT Provider regime under which, for example, crypto exchanges can be regulated._ _Our laws require that customer due diligence and AML checks be conducted on contributors of digital assets. We set ourselves high standards with the aim of attracting good quality crypto business and maintaining our reputation as a quality jurisdiction to conduct this._ **_Cons:_** _Businesses not conducting customer due diligence and AML checks on their crypto customers would be breaking the law if they set up in Gibraltar. Any companies which store or transfer digital value, by way of business, belonging to a customer need a financial services licence from our regulator (a DLT Provider Licence)._ _Many see AML checks and regulation as a positive, but there are crypto businesses which do not want the responsibility of complying with these. Gibraltar is not the place for such businesses._ #### [**Peter Howitt**](https://www.linkedin.com/in/peterhowitt/) **— Founder of** [**Ramparts law firm**](http://www.ramparts.eu/) _Customers and stakeholders working with crypto operators rightly expect that those operators meet minimum standards in key areas, including in respect of: protecting client assets, anti-money laundering, treating customers fairly; and ensuring that audits are carried out of assets and systems of control used by such operators._ _Gibraltar is a leading reputable e-commerce and FinTech hub in Europe. We have a blockchain-friendly government and a financial services regulator that has taken great pains to try to create good regulation for the sector so as to encourage the best companies to set up here in Gibraltar. We also have thousands of workers and professionals based in Gibraltar that are experienced in supporting international cross-border e-commerce businesses. Residents here also benefit from the English legal system and a favorable tax regime for individuals and companies (e.g. low income tax and no capital gains)._ _In 2018, Gibraltar introduced the DLT Provider regime to encourage exchanges, custodians, brokers, and other professionals that use DLT technology to become licensed in Gibraltar. Many operators want to be regulated to provide greater confidence to the market that they are managed carefully and that, e.g., client assets are subject to principles and rules that are intended to protect them from harm. In addition, all DLT Providers are subject to full anti-money laundering obligations and this provides additional confidence to the market and key stakeholders. Being licensed here also makes it easier to access banking relationships (which is a major bane of the crypto sector). \[See here for more info and potential quotes:_ [_https://www.ramparts.eu/why-should-crypto-operators-exchanges-and-custodians-get-a-dlt-licence-in-gibraltar/_](https://www.ramparts.eu/why-should-crypto-operators-exchanges-and-custodians-get-a-dlt-licence-in-gibraltar/)_\]_ _I have tried to also think of some negatives about establishing in Gibraltar… but there really aren’t any. :)_ #### [**Philip Vasquez**](https://www.linkedin.com/in/philipvasquez/) **—** Associate at [TSN Law](http://www.tsnlaw.com/) & Founder **of** [**DAM**](http://dam.gi/) _There are a few good reasons to set up in Gibraltar, The main ones are that_ _(1) there are Distributed Ledger Technology (DLT) specific regulations which allow these businesses to operate in a regulated and reputable environment as of January 2018, and_ _(2) infrastructure exists with banks and advisers to support the operation of such businesses._ _Gibraltar started its work on DLT in 2014 and now we are seeing a growing ecosystem from this. The downside of Gibraltar at this particular point in time is the uncertainty of “Brexit” which involves Britain’s departure and therefore Gibraltar’s departure from the EU. However, no regulations exist at the EU level in respect of the blockchain or cryptocurrency, so any impact of brexit would be different than other companies or industries that rely on passporting such as in insurance or banking for example._ #### [**Omri Bouton**](https://www.linkedin.com/in/omribouton/) **— Trainee Solicitor at** [**Hassans International Law Firm**](http://hassans.gi) _Gibraltar offers a unique range of advantages for blockchain/crypto businesses. The DLT Regulations came into force in January 2018 and provided the first dedicated regulatory framework for blockchain businesses in Europe. Being one of the first movers allowed Gibraltar to become a core hub for the fintech industry, hosting many of its leaders such as eToro, CEX, TokenMarket, Huobi, Covesting, and Xapo. The presence of these companies has allowed the jurisdiction and its institutions to gain useful experience and to develop dedicated products for fintech businesses such as, for example, access to banking._ _With regards to potential negatives, Brexit would be seen as the main concern to most people._ _However, the DLT Regulations are not derived from EU law and are therefore not impacted by Brexit. The licence is not passportable but enables licencees to operate and provide services in any jurisdiction that does not prohibit those services. A DLT licence evidences the stability and quality of the company that is licenced. Proving that your business has put in place, amongst other things, adequate measures to protect consumers and combat anti-money laundering is important. It gives comfort to consumers, but also to prospective investors, banks, and other partners._ ### **Canada:** #### [**Denko Manceski**](https://www.linkedin.com/in/denko-manceski-2648407a/) **— Co-Founder and CEO at** [**Viewly**](http://view.ly) _1\. We chose Canada because the law is more mature and, more importantly, more stable. Some countries (like Slovenia) keep changing laws about crypto and this creates uncertainties for businesses._ _2\. Canada is a very reputable country compared to some random offshore islands, and this improves the image of the company. People realize that it’s not a shady company hiding in unknown places in the world. People are also happier to partner with companies like this._ _3\. Tax (GST) % is decent._ #### [Aaron Grinhaus](https://www.linkedin.com/in/agrinhaus/) — Lawyer at [Grinhaus Law Firm](http://grinhauslaw.ca) **_Pros:_** _Stable country, great economy, highly skilled workforce, leader in blockchain technology in particular, low corporate tax rate, and access to investment capital._ **_Cons:_** _Regulation may require greater startup capital and more time if you are dealing with securities, tax rate is low, but not 0 as it is in some offshore jurisdictions._ ### **Lithuania:** #### [**Ieva Balčiūnaitė**](https://www.linkedin.com/in/ieva-bal%C4%8Di%C5%ABnait%C4%97-91b19184/) **— Attorney at Law** _There are only pros of incorporating a blockchain/crypto company in Lithuania! It could be emphasized that Lithuania is not only a country with the most ICOs and money to be raised per capita through ICO, but also an amazing gateway to Europe’s fintech market._ _The government, business banks, and investors are all united by the positive approach for ICO and blockchain. Blockchain businesses, entrepreneurs, and investors benefit from the positive approach of the country for ICO and blockchain. Lituania is one of the leading crypto regulators in the world._ _Lithuania’s central bank provides a sandbox plan (the second round of LBChain has started) for the EU’s financial license designed for crypto companies and together with the Ministers of Economy and Finance, who always remind that Lithuania is a country of innovation, entrepreneurship and brilliant businessmen are constantly achieving very impressive results._ _The synergy of Invest Lithuania, Blockchain Centre Vilnius, Vilnius Tech Park (the Silicon Valley of the Baltics), Rise Vilnius, and other institutions and innovative fintech hubs for rising startups in Lithuania empower to connect startups and experts and enable them to solve various challenges, balance fintech opportunities and risks._ _Lithuania is the coolest place for blockchain/crypto/fintech startups — over €150 million has been raised in the country over the last decade, while €600 million has been raised on ICOs over the last 18 months, which speaks volumes about Lithuania’s successful startup ecosystem._ #### [**Tadas Bulota**](https://www.linkedin.com/in/tadas-bulota-ll-m-0214465/) **— Managing Partner at** [**Bulota Legal**](https://bulotalegal.eu/) **in Lithuania** _Lithuania is among leading fintech hubs and a gateway to Europe of more than 500m potential consumers. Bank of Lithuania provides a fast-track licensing procedure for FinTech newcomers with a professional guidance, smooth authorization, and forward-thinking regulation. FinTechs and startups are welcome to test out LBChain, technological and regulatory sandbox created by the Bank of Lithuania to accelerate the development and application of blockchain-based solutions in the financial sector._ _However, Lithuanian supervision institution holds reserved position on cryptocurrencies and ICO as banks, payments institutions and other financial participants should not provide services associated with cryptocurrencies or participate in their release._ #### [**Darius Lengvinas**](https://www.linkedin.com/in/darius-lengvinas-a87570103/) **— Lawyer and Co-Founder at** [**LAWTHIS**](https://www.lawthis.com/) _I see the following pros of choosing Lithuania for incorporating a blockchain/crypto company:_ **_Innovative & responsive central bank_**_: Lithuania has the very cooperative and well-managed Bank of Lithuania. During the crypto boom in 2017–2018, the bank used to have at least several meetings a day to discuss new ICO projects and provide its official position on received enquiries regarding the project’s compliance under the respective national laws. Despite the fact that it is a state-owned institution, the Bank’s representatives always help blockchain projects to better understand the particularities of Lithuanian market. Moreover, the bank is also managing its own blockchain project, called LBChain, and actively initiates other initiatives._ **_People & knowledge_**_: You can hardly find a marketing or IT company that never heard about the blockchain and its value. People here in Lithuania are keen on learning everything about new technologies, and their huge desire for creating something extraordinary always distinguishes us from other countries. I can assure you, it won’t take long to find a blockchain expert to provide you with the necessary professional advice._ _On the other hand, I can also single out one main disadvantage:_ **_Licensed institutions & crypto_**_: On October 10, 2017, the Bank of Lithuania presented its position on virtual currencies and noted that financial market participants (banks, e-money institutions, payment institutions, etc.) should not participate in any activities or provide services associated with virtual currencies, unless such activity in relation to virtual currencies is separated from the service provider’s main financial activities. Unfortunately, such regulator’s approach precluded some promising crypto related fintechs from obtaining a license to provide financial services in Lithuania._ ### **Estonia:** #### [**Jaanus Prost**](https://www.linkedin.com/in/jaanus-prost-81692836/) **—** Chief Legal Officer at [Mothership](https://mothership.cx/) _The Estonian government is constantly looking for ways how to utilize new technologies. One of the advantages it provides is e-residency that allows people from across the world to open and operate companies in Estonia remotely. You can apply for authorizations and declare and pay taxes fully online without bureaucratic hassle (you can learn more here:_ [_https://investinestonia.com/business-in-estonia/establishing-company/establishing-a-startup/_](https://investinestonia.com/business-in-estonia/establishing-company/establishing-a-startup/)_)._ _Estonia also has a very favourable tax regime for companies having their assets in cryptocurrencies. Estonia doesn’t have a classical corporate income tax. Instead, profit is taxed once it is distributed (the tax rate is 14% or 20% on top of the distributed profit). This is especially important if company’s assets are in volatile assets which may increase or decrease in value rapidly. E.g. the value of Bitcoin surged in 2017 creating large profits to anyone holding Bitcoin. However, it was followed by a significant decrease. So companies in jurisdictions with classical corporate income tax ended up in situations where they had to pay corporate income tax on profits that had already evaporated. In Estonia, this would not happen._ #### [**Risto Rüütel**](https://www.linkedin.com/in/risto-r%C3%BC%C3%BCtel-a2549813/) **— Head of Regulatory & Compliance at** [**Eversheds Sutherland Nordic/Baltic Business Group**](https://www.eversheds-sutherland.com) **_Pros:_** _The Estonian advanced e-society and favourable business environment have made the jurisdiction very popular among entities engaged with ICOs or otherwise operating with cryptocurrencies. Estonia is also allegedly number two in the world for startups per capita, which is a testament to the country offering a supportive ecosystem for various types of companies. The ease of doing business is greatly enhanced by the Estonian e-Residency, which offers a government-issued digital ID to applicants from all over the world, which makes it ideal for digital nomads, freelancers, and startups. The digital ID card enables the e-resident to make use of most of the e-society services that Estonia offers, which has made it attractive to entrepreneurs in various fields of business, including virtual currencies. It is possible to establish a company fully online in only a few hours and operate it remotely from anywhere. Taxation and reporting obligations can also be performed over the Internet. There is no corporate income tax on retained and reinvested profits._ **_Cons:_** _The main con, which actually does not set Estonia apart from most of the other countries, is the regulatory uncertainty still surrounding the crypto world. Even though the Estonian Financial Supervision Authority has provided some guidelines, much is yet unclear and the regulatory authorities have decided to err on the side of caution, being prudent in their decisions to require companies to obtain licences and grant them. This means that obtaining the necessary licences may take some time and effort. However, the upside of this is that if you have gained a licence from the Estonian FSA, this will provide a mark of quality._ #### [**Sven Anton**](https://www.linkedin.com/in/svenanton/) **— Lawyer at AS** [**SEB Pank**](http://sebgroup.com) _The main reason, of course, is that Estonia gives access to the European Union. If one founds his business in Estonia and is compliant with laws the of Estonia, then the business shall have access to all EU countries without restrictions._ _Some general reasons (in comparison with other EU countries also) why one should start a blockchain/crypto business in Estonia are great IT-infrastructure (e.g._ [_e-residency_](https://www.eas.ee/?lang=en)_,_ [_e-government program_](https://e-estonia.com/solutions/e-governance/)_) and widespread English, e.g laws and all procedures for applying for needed licences are in English. Check e.g. Estonian legal acts here:_ [_https://www.riigiteataja.ee/en/_](https://www.riigiteataja.ee/en/) _._ _In my opinion, one very specific reason for (sometimes considered as reason against) is that Estonia has very experienced and trustworthy authorities. To say in a honest way: no bullshiting is allowed. Our banks are also very strict in a AML/KYC matters. We know that being innovative economy creates a lot of risks and we are ready to deal with them. Sometimes businesses complain that licences are difficult to get, but in my practice I think it was not an unnecessary bureaucracy, but the business itself did not understand itself (I have had a case, where South-Korean company wished to apply for e-money licence — it is not related to crypto, because e-money is another service entirely)._ _What worries me is the overall negative attitude against crypto/blockchain businesses. That is because of Bitcoin, e.g. our president of national bank are in a position that Bitcoin, Ethereum etc are “full of air”. Blockchain is always seen in relation with Bitcoin. So this is the main minus in Estonia, but as it seems to me, it is not only Estonia having this problem. And, actually, Estonia is having more and more big conferences about blockchain as technology and the biased understanding of blockchain is changing, check e.g._ [_https://moontec.io/_](https://moontec.io/) #### [**Nikolay Demchuk**](https://www.linkedin.com/in/mykdem/) **— Lawyer at** [**NJORD Law Firm**](http://njordlaw.com) _Estonia is a blockchain-technology and crypto-friendly jurisdiction, because:_ _(i) Although there is a lack of clarity and regulations about blockchain-based business models, authorities and regulators treat blockchain as opportunity, not as a risk_ _(ii) Its thin bureaucracy in Estonia, definitely not over-regulated jurisdiction_ _(iii) Estonian authorities are accessible and mostly helpful_ _(iv) Estonian authorities are ready to communicate in English_ _(v) Access to “crypto-licenses”: cryptocurrency exchange and cryptocurrency wallet services;_ _(vi) Estonian e-residency system makes managing Estonian company and communication with authorities easy_ _(vii) Unique corporate income tax system (as far as funds stay in the company, no income tax)_ **_Cons:_** _(i) Banks are reluctant in cooperating with crypto-related businesses. Although, we must admit that recent amendments in the Commercial Code made financial services more accessible also by blockchain-technology related startups(ii) There is no special regulation addressing smart contracts and blockchain issues. The practices are to some extent guided by high-level working-group’ practical guidelines_ #### [**Priit Martinson**](https://www.linkedin.com/in/priitm/) **— Title Director, Government Technology & Digital Transformation Leader at** [**PWC**](https://www.pwc.com/) **_Pros:_** * _30+ ICOs closed in 2018 and 40+ in the pipeline_ * _Estonia ranks third in Europe in funds raised via ICOs_ * _0% Corporate Income Tax on retained and reinvested profits_ * _e-Residency program — Government-issued digital ID that grants virtual residency in Estonia. Enables easily starting and managing a global business in a trusted EU environment_ **_Cons:_** * _Estonia has not enacted any specific regulation or investor protection on ICOs, yet._ * _Opening a bank account can be difficult and expensive._ ### **Israel:** #### [**Tamir Hodorov**](https://www.linkedin.com/in/tamir-hodorov/) **— Lawyer at** [**Hodorov Law Firm**](http://www.hodorov.legal/) **_Pros:_** * _In a 150-page long document, Israeli Securities Authority has recognized and legitimized ICOs, as long as they comply with the securities law, expressing a stance similar to the US SEC._ * _Blockchain companies, as innovative technologies companies, may receive tax benefits of up to 7% from the Israeli Innovations Authority (16% instead of 23%)_ * _Israel is considered an “onshore” jurisdiction, since it complies with international AML standards and has a status of “observer” in the international FATF._ **_Cons:_** * _Tax is personal, i.e. revenues of the ICO are not tax exempt; the ICO is taxed as if it was a bulk sale of services/products, with some caveats._ * _Some prohibitions on trading with our Arab neighbors — it is illegal to receive funds from Iranian, Syrian, or Lebanese investors (which are officially declared as enemy states)._ #### [**Abraham Tzur**](https://www.linkedin.com/in/abrahamtzur/) **— Cryptocurrency, Technology and Business Lawyer** _Generally speaking, the situation in Israel is similar to other countries which are still learning the blockchain environment and the regulation, as of today, is unclear. Now, when the “hype” around ICOs is over (although I do believe that we’ll see more ICOs, but the wild-wild-west is over) I do advise my clients to incorporate blockchain technology to their product only when such technology is needed._ _With respect to the pros and cons in Israel — this is a very tricky question because of the unclear regulation (generally speaking, our firm advise clients to incorporate the token issuer in other jurisdictions such as Malta and Estonia)._ #### [**Roy Keidar**](https://www.linkedin.com/in/roy-keidar-833a451/) **— Special Counsel at** [**Yigal Arnon & Co**](http://www.arnon.co.il/) _Israel has for quite some years been a favorable jurisdiction for technological startups, and in that sense blockchain technologies-based companies are no different. Things get more complicated when it comes to raising capital by selling tokens to investors (ICO). Given the concerns raised by the Israeli securities regulator and “unfriendly to crypto” banking system, most Israeli entrepreneurs would not sell tokens from an Israeli company but rather would seek to launch a foreign company in a jurisdiction which provides more clarity and certainty, like Gibraltar or Switzerland. So, typically we see a legal structure that combines an Israeli company which develops and sells technology and another foreign company which conducts the ICO. The two companies would engage in a commercial relationship. This may change in the near future as regulators realize the potential in blockchain technology, thus showing willingness to adopt variety of tools, like “Sandbox”, to allow for Israeli companies to innovate while protecting the interests of the public._ ### **Singapore:** #### [**Tomoaki Sato**](https://www.linkedin.com/in/tomoaki-sato-086a0555/) **— Founder of** [**Starbase**](http://starbase.co) **_Pros:_** _\- Very friendly fintech environment. MAS understanding crypto is breaking technology._ _\- Several crypto-knowledged big and small law firms and accounting firms._ _\- Several blockchain/crypto/fintech incubation organizations._ [_https://singaporefintech.org/_](https://singaporefintech.org/) [_https://www.access-sg.org/_](https://www.access-sg.org/) _\- Very cool living environment. Convenient, clean, every official document is in English, friendly and has smart people._ _\- If you live in your own home country, you don’t need to be a resident in Singapore to establish and operate as Singapore company._ _\- Creating a Singapore company is very easy and there are online systems to create and maintain._ **_Cons:_** _\- Singapore is already also one of the biggest traditional financial hubs in the world, there might be regulatory situation change._ _\- Strict AML rule exists, so there is a need for KYC for cryptocurrency holders who use your platform. (This is also a pro)._ #### [**Yingyu Wang**](https://www.linkedin.com/in/yingyu-wang/) **— Director at** [**Taylor Vinters Via LLC**](http://www.taylorvintersvia.com/) _Other than being a good place to live and do business generally, Singapore is one of the top global financial centers to embrace DLT. New laws and regulations are being promulgated. There is also a healthy interest from the government and civil society. However, a practical difficulty is dealing with the banks. This may change once the appropriate licensing regime is put into effect, expected by this year._ #### [**Gavin Tan**](https://www.linkedin.com/in/gavin-tan/) **— Legal Counsel at** [**Aspire Capital**](http://aspire-cap.com) _A key factor contributing to Singapore’s popularity as a blockchain hub is the regulators’ progressive — light-touch but proactive — regulatory approach towards blockchain technology. A high level of legislative clarity is further bolstered by clear guidance from regulators, e.g. the Monetary Authority of Singapore (MAS) regularly issues guidance notes on what is allowed or prohibited for token offerings. Regulators are also tuned in to practical difficulties faced by blockchain companies. The MAS proactively works with banks to ensure that it is easier for blockchain companies to open bank accounts — a very real problem faced by blockchain companies all over the world._ _Furthermore, Singapore has a bustling blockchain ecosystem for blockchain companies seeking capital and partnerships. The largest blockchain summits — Consensus & Blockshow — have chosen to host here._ _On the other hand, it is difficult to hire technical blockchain talent in Singapore, being a small country and a relatively young blockchain hub._ #### [**Malcolm Tan**](https://www.linkedin.com/in/malcolmtan/) **— CEO and Founder at** [**Gravitas.Financial**](https://gravitas.financial/) **_Pros:_** _1 Singapore has a very “pro-crypto” government and progressive and inclusive laws, especially with the new Payment Services Bill being passed on Jan 14, 2019._ _2\. Singapore is a leading place globally to do business from. It has a very open business environment._ _3\. It is fast and cost effective to register a company in Singapore — we typically help clients register a new crypto company in 1 to 3 days._ **_Cons:_** _There will be a new regulatory regime soon — the Payment Services Bill was passed on Jan 14, 2019 and will likely come into effect from July 2019 to Dec 2019._ _Singapore has a higher cost of living, and more expensive staff costs._ _Banks in Singapore are not welcoming of crypto-related activities, so opening a bank account will be tough._ ### **Hong Kong:** #### [**Danila Logofet**](https://www.linkedin.com/in/danilalogofet/) **— Partner at** [**Herbert Smith Freehills**](http://www.herbertsmithfreehills.com/) _Pros: Fairly progressive regulator issuing useful guidance on the nature and way of dealing with crypto and blockchain projects, lack of strict regulations._ _Cons: Difficult to open a bank account for startups, the announced future licensing requirements for crypto exchanges, including the sandbox regime, are unclear and may be overly strict._ #### [**Padraig Walsh**](https://www.tannerdewitt.com/our-people/padraig-walsh/) **— Partner at** [**tannerdewitt.com**](https://www.tannerdewitt.com/) _The suitability of any location as a place to set up and operate business always depends on the nature of the business. Hong Kong is no different. In some respects, Hong Kong is a very straightforward and convenient place to operate. Setting up a company is a straightforward process (apart from opening bank accounts). The tax regime is straightforward and comparatively favorable to most places. Outside of sectors, such as financial services, there is relatively little regulation or government oversight. There is an independent and internationally reputable court system and arbitration center. There are excellent telecommunication networks and infrastructure. It is convenient to get to most places in Asia from Hong Kong, and you are at the doorstep to China. Also, as a financial services center, if the venture is seeking to target financial institutions as investors or clients, then there is close proximity to a strong cluster of those institutions in Hong Kong. It is a truly international city, and a very convenient place to live and work. These are some of the plus points._ _Specifically in relation to the blockchain and crypto space, the Hong Kong government has adopted a pragmatic, but generally positive approach. The blockchain is seen as a very promising technology for the future, and the Hong Kong government has sponsored conferences showcasing the Hong Kong story in respect of blockchain technology ventures. There are several leading blockchain and crypto consultancies and advisories in Hong Kong, and many projects are actively underway here. Unlike other locations, there is no ban or prohibition in respect of cryptocurrencies. Many crypto exchanges have chosen Hong Kong as a location to operate or provide services. The Securities and Futures Commission has announced that it will launch a regulatory sandbox to assess if and how it will regulate crypto exchanges going forward. Funds that are managed or marketed in Hong Kong, and have more than 10% of their assets under management invested in crypto assets, need to be approved by the Securities and Futures Commission. In general, Hong Kong has shown that it is open for business in respect of appropriate blockchain and crypto business ventures, and has charted a regulatory path that suggests how those ventures will lawfully operate in Hong Kong._ _Hong Kong is an international financial services center. Many ventures in the crypto space in particular need to consider whether they are engaging in activities that require approval by the Securities and Futures Commission (or other regulators) in Hong Kong. Also, if the activities relate to the offering or trading in cryptocurrencies, those making the offering or conducting the trading will need to consider whether securities law and regulation applies, and they must meet the required compliance standards. Hong Kong is not a soft-touch location when it comes to regulation and enforcement. Ventures that are suspicious or looking to shortcut proper standards of compliance will not be welcome in Hong Kong. It is a location that is more suited to ventures launched by experienced executives that understand that operating in a regulated environment requires proper standards of probity and integrity._ #### [**David Meredith**](https://www.linkedin.com/in/davidmeredithlawyer/) **— Joint Managing Partner at** [**Harneys**](http://harneys.com) _Hong Kong is a good place for the blockchain/crypto because of what, to date, has been a light-touch regulatory environment. Its free-wheeling, laissez-faire Cantonese business culture has nurtured an ecosystem to support new companies. Hong Kong is truly a global financial centre and hosts key blockchain/crypto industry conferences in the region. It also has well-oiled venture capital machinery to pump money into new ideas. With inputs like that, it is not surprising that companies like Bitfinex, among the largest cryptocurrency exchanges in the world, come out the other end. The risk at the moment is whether the Hong Kong government adopts an overly cautious posture, perhaps also in recognition of mainland China’s outright ban on cryptocurrencies. China tolerates a different way of doing lots of things in Hong Kong and Macau, politically, economically, and socially. Witness Macau’s casino industry. Also witness how mainland China can turn off the spigot of mainland visitors to the casino when it wants to. But cryptocurrencies in particular are really a different breed of risk. Hong Kong made its first fortune as a manufacturing centre and an entrepot for international trade. That did not pose a risk at all to mainland China, nor did Hong Kong’s second fortune, as intermediator of capital flows between China and the world. In fact, the role of capital intermediator fostered tremendous economic growth in mainland China in the past 30 years, and made some pretty easy fortunes for what we might diplomatically call “well-connected” people. But the fact is, cryptocurrencies represent tremendous risk of social instability when taken as a medium of gambling, yet provide no upside of government control, which is precisely the point of cryptocurrencies and is anathema to mainland authorities. Perhaps it will be sufficient for mainland purposes if they can keep mainland punters out of the crypto casino so long as the capital account remains closed._ #### [**Helen Liu**](https://www.linkedin.com/in/helen-liu-07471225/) **— International Lawyer & Entrepreneur** _Hong Kong is a global financial center with a strong infrastructure and solid investor appetite. It is relatively easy to access the thriving crypto/blockchain network. Due to its compact size, the local community regularly converges as well as with visitors from other Asian and worldwide communities. This creates numerable opportunities for local and overseas talent, and great visibility to venture capital and Asia fundraising. The path to incorporating a company is simple, fast and cheap and accessible to foreigners living outside of Hong Kong. The feeling is a genuine collaborative community and a jurisdiction that remains lightly regulated in this space. This is weighed up against the Hong Kong regulatory environment being closely watched for change, since China’s 2017 ban on cryptocurrencies and Hong Kong’s public awareness campaign warning of the dangers of investing in ICOs and cryptocurrencies last year. Further, the recent rise in the popularity of STOs, has led the SFC to release a circular clarifying its regulatory stance on digital assets. Overall, Hong Kong regulators have taken a cautious but open approach, mainly focused on protecting and informing investors rather than closing its doors, and Hong Kong remains a top jurisdiction for incorporating in this space._ ### **United Arab Emirates (UAE):** #### [**Esteban van Goor**](https://www.linkedin.com/in/estebanvangoor/) **— Managing Partner** [**Proprietary Trading Crypto Commodities**](http://megalodon.ae) **_Pros:_** * _The UAE is very positive about blockchain technology and see the potential of the usage of this technology in different fields (like e.g. identity). This you can tell as the UAE government has a blockchain strategy, where they aim to use blockchain technology for digital transactions, where people will get a unique identification number that points to their information on the blockchain. The latter is expected to save 398 million printed documents and 77 million work hours annually._ * _Incorporating a blockchain company in the UAE can have many benefits, as there is a big community here and a lot of meetups where people share their experiences and collaborate on matters related to blockchain/crypto. Furthermore, University programs on the blockchain will also be made available._ * _Another positive initiative in the UAE is the “Dubai Blockchain Center”, which aims to bring blockchain thought leaders, developers, investors, and educators together._ * _In relation to crypto-related companies, the UAE is also a positive jurisdiction, as there is a big community and meetups in relation to crypto. People in the region have interest in crypto (Bitcoin and Ethereum specifically). Furthermore, from a regulatory perspective the UAE is a pioneer in relation to crypto regulation, i.e. the financial regulator announced upcoming crypto legislation and the Abu Dhabi Global Market (“ADGM” ) already launched a crypto asset framework, regulating spot crypto asset activities, e.g. activities rendered by (crypto) exchanges, custodians, and intermediaries (agents/brokers) from the ADGM. The latter is helpful when setting up a crypto-related company in the UAE._ _As a con, it is difficult to think of one, as I did not not experience cons here while operating in the UAE._ #### [**Ihab Arja**](https://www.linkedin.com/in/ihab-arja-12207415/) **— Senior Associate/Commercial & Aviation Expert** _With government-driven initiatives such as The Emirates Blockchain Strategy 2021 and the Dubai Blockchain Strategy, the UAE is playing an integral role in the international development of the blockchain. Hence, the fledgling blockchain companies would participate in making the future by exploring and evaluating the latest technology innovations that demonstrate an opportunity to deliver more seamless, safe, efficient, and impactful state experiences. There is no specialized legislation that regulates this kind of activity._ ### **Japan:** #### [**Ken Kawai**](https://www.linkedin.com/in/ken-kawai-40aab2aa/) **— Partner at** [**Anderson Mori & Tomotsune**](http://amt-law.com) **_Pros:_** _・Stable and clear regulatory environment: Japan is a first country to establish legal frame work regulating cryptocurrency in 2017 and gave cryptocurrency the status of payment method. Japan is going to introduce security token / tokenized security regulations and wallet / custody regulations in the near future. Because of the clear regulations under the statutory law, blockchain / crypto companies in Japan will be unlikely to suffer from the sudden change of the regulatory stance by the government. Also, sophisticated large companies such as major financial institutions, institutional investors prefers moderately regulated environment to non-regulated environment._ _・The running cost of a blockchain company is reasonable: In Tokyo, there exist good blockchain communities. Good and capable blockchain engineers can be hired with reasonable costs. Also, cost of living in Tokyo is cheaper than other major cities such as Silicon Valley, New York, London, Shanghai, and Singapore._ **_Cons:_** _・The cost to comply with regulations is expensive for startups: Although regulations on cryptocurrency are not too strict, the cost to comply with the applicable regulations is expensive for startups, if they would like to sell tokens._ _・ It is not easy to open a bank account: Most of all banks are reluctant to open accounts for crypto companies._ #### [**Anthony Lojac**](https://www.linkedin.com/in/anthonylojac/) **JD,** PhD **— Founder & Team Leader** [**english4crypto.jp**](http://english4crypto.jp/) _Japan has the third largest economy in the world with the highest level of awareness and use of cryptocurrencies._ _But there is a persistent lack of adequate VC funding and overall immature infrastructure for startups, with a current tax rate up to 55% for crypto gains. In addition to complex linguistic and cultural barriers, the regulatory environment is especially severe due to the repeated hacking of cryptocurrency exchanges._ _Despite the great appeal of the Japanese market, it is not currently advisable to incorporate a crypto startup in Japan._ ### **Korea:** #### [**Hong Yul Ryoo**](https://www.linkedin.com/in/hongyul-harry-ryoo-8a095b56/) **—** Partner at [Lee & Ko](http://www.leeko.com) **Pros :** The blockchain and cryptocurrency is one of the hottest issues in South Korea, so you would be able to easily find people eager to work with you. And since the Korean government has not specifically regulated the blockchain or crypto industry, you could establish an enterprise in South Korea easier than other countries. **Cons :** As you might know, the Korean government currently takes an extremely negative position toward ICOs or fundraising related to cryptocurrency, so you would face difficulty in gathering investors in South Korea and invisible administrative restriction by the Korean government. Moreover, as the interest in the blockchain and cryptocurrency is getting higher, coding engineers tend to demand higher salaries or benefits from the prospective employer, which means you might have to pay more than you would years ago. #### [SJ Hong](https://www.linkedin.com/in/hongs/) — Partner, Attorney at Law at [Duson Law](http://www.dusonlaw.com) #### **_Pros:_** * _I believe the level of general public awareness of cryptocurrencies, especially Bitcoin, is very high in Korea. It makes it much easier to do a blockchain technology-based business in Korea than in most countries._ * _The crypto scene in Korea is very active — there are lots of crypto startups, even large companies (Kakao, LINE, etc.) are doing crypto business; general public is very active in investing in crypto assets._ * _The Korean government is friendly to blockchain technologies in general._ **_Cons:_** * _The Korean government’s policies on ICOs are very negative._ * _Laws and regulations involving crypto in Korea are unclear and unpredictable._ #### About the author: [Kirill Shilov](http://twitter.com/kirills4ilov) — Founder of Geekforge.io and Howtotoken.com. Interviewing the top 10,000 worldwide experts who reveal the biggest issues on the way to technological singularity. Join my **#10kqachallenge:** [GeekForge Formula](https://formula.geekforge.io/).

Pros & Cons: How do you choose which crypto-friendly jurisdiction to start your company in?

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