jurisdiction for crypto trading

[fdsfund]

Good Day!

We want to set up a crypto trading company. We trade on top crypto exchanges: binance, bitfinex, bitmex, kraken and other as private persons. We make arbitrage and algorithmic strategies. We have no clients and we don't plan to provide any services. So our business model is to do profitable arbitrage trading.

We need to trade as a company and we are looking for a jurisdiction and for a bank. Our business plan is

• Set up a company.
• Open a bank account.
• Open accounts on crypto exchanges (only top exchanges)
• Start to trade
• If we have a profit we could be able to sell it and withdraw fiat.

Our planed profit is no so big to make a hedge fund. We are ready to pay tax). So we need to have regular business construction and not expensive. We don't ready to create hadge fund and pay 70 000$ per year for it.
Could you give advice?

 

[Irration4l]

Estonia is one of the more crypto - friendly jurisdictions and the company setup there‌ is comparably easy. That being said, if you do not plan on getting client investments,‍ there is some hassle involved, such as having a board member in Estonia, office rent,⁠ etc. But it is one of the better jurisdictions in regards to obtaining banking.

 

[fdsfund]

Estonia has 25% TAX. I think to much. And we do not plan on getting‌ client investments.

 

[JohnLocke]

I wonder why you didn't checked Zug / Swiss already for this business model. If‌ you have that money in place it may be very simple to get setup there‍ and safe in taxes like most of the other big players do.

 

[fdsfund]

I think it is too expensive. As I understand it is more about⁠ family office. We have not enough money.

 

[Granwasa]

I would suggest you to take a look at Georgia @fdsfund.
Many Crypto business‌ are established there and there is also a Bitcoin Mining facility, Bitfury.
The government is‍ crypto friendly and in 2019 they exempted cryptocurrencies from value-added tax (VAT).
Georgia also offers⁠ Free Tax Zones or Virtual Zones where your entity pays 0% taxes.
Lastly, Georgian banks⁤ must, of course, follow their KYC procedures so you should have all the proof of⁣ funds available.
This subject was already deeply discussed here.

 

[khinkali]

Georgia doesn't tax crypto trading of natural persons (according Public Decision No. 201) but it‌ does tax companies. Virtual Zone is tax free only for software and IT service exports.‍ Free Industrial Zones seem to be getting a reputation for being awkward (especially banking).

The obvious approach would be an International Finance Company, but there seems to be quite conflicting⁠ advice online about how easy this is. I intend to explore this in a few⁤ months to open up to investors, although not all crypto exchanges allow sign ups from⁣ Georgia.

@fdsfund I guess this has a lot to do with where you manage the⁢ company from and where you all are resident. Have you looked into partnerships? UK, IE︀ and NL are talked about.

Also when you say "we", are you in the same︁ family? All high net worth or sophisticated investors? If not, then I would worry about︂ collective investment regulations where the company is set up, where you manage it from and︃ where the investors are resident. From the research I've done so far, those regulations seem︄ more problematic than the tax structure.

 

[Granwasa]

The Georgian Ministry of Finance published a public decision on June 28, 2019 (the decision)‌ regarding taxation of cryptocurrency in Georgia. According to the decision:

• individuals in Georgia are exempted‍ from income tax on any profit received from selling cryptocurrency;
  
• selling cryptocurrency (exchanging it into⁠ Georgian or other national currencies) is not taxable by value-added tax (VAT) (applies to⁤ both corporations and individuals);
  

Speaking about the Free Tax Zone or Virtual Zone... The allowed⁣ business activities are:

• Crypto Crowdfunding
  
• Offshore Crypto currency exchange
  
• Offshore Asset Management FIAT / Crypto⁢
  
• Investment Advice to Foreigners
  
• Offshore Crypto Trading
  
• Software Development
  
• ICO launches
  

The advantages of the︀ Virtual Zone are:

• 0% corporate tax,
  
• 0% VAT,
  
• 5% capital gains tax on dividends (due︁ when dividends are paid out to the shareholders),
  
• no annual license fees.
  

This is the︂ official governmental link: TFZ advantages.

 

[reesek]

Malta is an okay jurisdiction to trade anything including crypto

 

[cyprus123]

I would like to point out that the Virtual Zone in Georgia is mainly for‌ IT, software, internet and programming companies. The regulations don't mention anything about crypto, asset management‍ or ICO launches.

 

[khinkali]

@cyprus123 do you know if a Georgian International Financial Company is suited for crypto?

 

[cyprus123]

@khinkali To be honest I would need to check it with our lawyer on the‌ specific case. But for this I would need a detailed business description, for a PSP‍ licensed entity in the crypto field it shall be possible to obtain the IFC status.⁠

 

[ITOFFSHORE]

In fact,︄ there are several options for such kind of business. For the moment Estonia and Singapore,︅ for example, regulate the cryptocurrency activity.

The uniqueness of the Estonian tax system lies in︆ the absence of income tax from legal entities. More precisely, it is formally there, but︇ it is 0%.
There are currently two cryptocurrency licenses in Estonia:

- The first is︈ the cryptocurrency exchange, cryptocurrency exchange, ICO.

- The second is the creation of virtual wallets︉ for storing cryptocurrencies.

Singapore also has regulatory clarity for cryptocurrency business. There are three classes︊ of licenses – a money-changing license, a standard payment institution, and a major payment institution.︋

Also there are different options with bank accounts as well. Have you already looked through︌ Estonia and Singapore jurisdictions?