With more regulation on ICOs and an ever shifting legal environment, there is now an increasing importance on where blockchain companies are incorporated and how they structure their token sale, economy, and mechanics.
With reports that 81% of ICO’s are scams, the recent SEC clampdown on companies operating ICO’s, and countries like China and South Korea outright banning tokenized fundraising, regulation is becoming key in the ICO landscape.
Proper regulation is an important aspect in launching an ICO and compliance allows for a structured and safe environment for both contributors and businesses. Here we will be outlining the benefits of running an ICO from Gibraltar — the sunny British/UK territory located on the bottom tip of Spain.
For reference DREAM have published their entire KYC process in this process.
GSFC Whitepaper & Approach
The Gibraltar Financial Services Commission (GFSC) have recently published a white paper (March 2018) that outlines their approach to ICOs and the use of tokens in raising funds. The white paper sets out the approach the commission will take when forming some of the world’s first regulation for the provisioning of ICOs.
The underpinning idea is that tokens, “in many cases, represent the advance sale of products that entitle holders to access future networks or consume future services”. By taking a utility based approach, the GFSC are regarding tokens not as a security but as a commercial product.
Unlike some other jurisdictions, the GFSC see tokens sales as an asset to the economy and are actively working to create a hospitable and secure environment for start-ups and investors, stating:
“Crowd financing is a perfectly legitimate method of raising finance as is seeking public subscription for new ventures. It is therefore desirable to establish a regulatory regime that helps firms in Gibraltar to develop new products and services and maintain competitiveness whilst, at the same time, protecting consumers and Gibraltar’s reputation”
The white paper outlines three core reasons it feels regulations on ICO’s are so important. Through the new regulation the GFSC is:
Helping protect consumers.
Protecting Gibraltar’s reputation as a leading financial jurisdiction.
Supporting the safe use of tokens as a means of financing new businesses.
The GSFC position is of course great news for companies planning to run an ICO as it creates an environment where regulators are working to ensure that ICO’s benefit all parties involved. Currently, all companies looking to launch an ICO in the territory also have to follow the DLT (Distributed Ledger Technology) framework.
This framework requires companies to act with integrity and transparency, support and protect their customers, maintain adequate financial resources, employ due diligence and risk assessment practices, secure client assets and money and follow all required financial crime regulations — such as KYC and AML practices. Every company running an ICO will need to follow an application and assessment process to gain the DLT authorisation.
One of the key features of the upcoming legislation is the provision of a dedicated ICO sponsor to each token sale. The sponsor will advise the company on the regulatory environment and will possess “appropriate relevant knowledge and experience” of ICO’s, being ultimately responsible for compliance. Ensuring there is an experienced and accountable person as part of an ICO will bring about better working practices and increase accountability and trust. The GFSC hope to have the legislation in place by October 2018.
It should be noted that the MLRO must be based in Gibraltar, so it’s important to find a partner who can provide this function, or you need to recruit an MLRO locally.
By introducing the DLT framework and additional upcoming legislation on ICOs, Gibraltar is helping to shape the future global financial environment for companies wanting to raise money through token sales. Investors are also provided further assurances on the legitimacy of ICOs from companies operating out of the Gibraltar regulatory environment.
It should be noted that if the IP is owned by the token sale company and that business operations for the sale are conducted by the company, DLT regulation is required.
As a Gibraltar based company, DREAM have established ICO processes in line with the Gibraltar system and requirements. DREAM runs full KYC checks on each purchaser of DREAM tokens, as well as establishing a local Money Laundering Reporting Officer (MLRO) who assess each transaction before confirming the contribution of funds through the ICO.
DREAM has worked with Gibraltar based legal firms to ensure the token sale is conducted meets ICO regulations.
The Crypto Harbour
Outside of the favourable regulatory environment, Gibraltar has a host of other benefits for ICO’s. Known as the “Crypto Harbour” the country has a reputation for developing new and exciting technology industries.
As a case in point, throughout its early growth, the online gaming industry utilized the supportive business environment in Gibraltar and the country is now the foremost jurisdiction in the world for online gaming companies. Gibraltar has a track record for supporting upcoming and existing business models and technology, offering companies incentives and ongoing support.
The government in Gibraltar is very pro-business and its regulator has good experience and knowledge of blockchain technology. In support of this, Gibraltar also has a large number of experienced supporting service firms such as law and accounting organisations, as well as banks that are familiar with ICOs and blockchain companies.
Due to the small size of the country (33,000 people) many of the supporting firms are closely aligned and work proactively with the government and financial regulators.
As DREAM know from recent experience, having this this kind of support network local to your ICO is important and helps a great deal with a launch. On top of the support available to blockchain companies, Gibraltar hosts an attractive corporate tax rate of just 10%, enabling companies to drive future growth.
To date, Gibraltar has hosted four ICOs that have gone on to raise more than $10 million in funding:
WePower — raised $40 million
Energi Token — raised $15 million
Rentberry — raised $30 million
Globitex — raised $15.5 million
Gibraltar is also home to several well regarded exchanges (BTCC, CEX and eToro) with TokenMarket also based there — who recently won ‘The Best ICO Advisor’ award at the Cryptocurrency World Expo 2018.
The “Gold Standard” Crypto Exchange
GBX is aiming to be the world-leading and institutional grade token sale and exchange platform and is setting the new gold standard for the future of cryptocurrency exchanges. GBX also ran their own ICO for the Rock Token which raised $27 million, with the general public sale selling out in just nine seconds.
With a forward facing and supporting regulator having experience in blockchain technologies, an array of supporting firms and a business environment that clearly supports and fosters ICOs, Gibraltar is fast becoming one of the key places for ICOs.
DREAM chose to incorporate within Gibraltar to align with the industries best practices on ICO regulation and to be part of a business environment that supports and helps companies grow and raise funding through token sales.
The DREAM platform isn’t just another untested beta program on a white paper… It’s live and being used right now to hire blockchain professionals. The token sale will enable DREAM’s innovative team to take DREAM to the next level by integrating A.I. and incorporating our platform token.
- Click here to browse talent, or sign up and list your services.
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