Forward the original title Web3 Lawyers: How Do Blockchain Companies Choose the Best Offshore Jurisdiction? | Mankun Legal Insights

As Web3 and blockchain technology rapidly evolve, more and more companies are looking to find the right offshore jurisdiction for company registration on a global scale. For entrepreneurs and investors seeking flexibility, tax optimization, and legal protection, choosing the right offshore location is not just about cost savings; it’s about establishing a solid legal foundation for future business activities.

This article will explore popular offshore jurisdictions such as the British Virgin Islands (BVI), the Cayman Islands, the Isle of Man, Jersey, Guernsey, Bermuda, and Mauritius. It will analyze the regulatory policies, registration requirements, and examples of successful blockchain and Web3 companies operating in these regions, helping you make informed decisions in a global business environment.

Alternative offshore locations

1. Cayman Islands Overview The Cayman Islands have a specialized set of fintech laws and regulations, such as the Virtual Asset Service Provider Law (VASP Law), to promote digital asset-related businesses. The Cayman Islands offer flexible corporate structures, including Special Purpose Companies (SPCs), which are suitable for the needs of blockchain projects. Advantages, Businesses, and Examples.

• crypto funds

The Cayman Islands Monetary Authority (CIMA)’s Mutual Funds Law and Private Funds Law provide flexible fund structures. Coupled with the tax advantages of the Cayman Islands, these factors make it one of the primary registration locations for crypto funds. Additionally, the Cayman Islands have specific regulations and guidelines supporting the establishment and operation of crypto funds. Therefore, the Cayman Islands is the preferred registration location for many crypto hedge funds, such as Polychain Capital. Example: Polychain Capital is one of the largest cryptocurrency hedge funds in the world, registered in the Cayman Islands. Polychain leverages Cayman’s flexible fund structures and tax advantages to manage its crypto asset investments.

• Provision of Blockchain Technology Services

The Special Purpose Company (SPC) structure in the Cayman Islands is highly suitable for blockchain technology projects, offering a highly flexible corporate structure. Example: Block.one, the developer of the EOS blockchain, is registered in the Cayman Islands. This structure allows them to take advantage of the favorable blockchain technology and Special Purpose Company (SPC) regulations in the Cayman Islands.

Main Company Types and Key Establishment Requirements: The SPC is a special form of an Exempted Company (EC), with the main establishment requirements being:

• At least one shareholder
• At least one director
• Appointment of a registered agent
• Provision of a registered office address
• Submission of the company’s Memorandum and Articles of Association

The setup time is fastest at 1-2 business days. The British Virgin Islands (BVI) has a simple and efficient company registration process, attracting many blockchain startups. Additionally, BVI offers strong privacy protection for business ownership, which is appealing to some privacy-conscious digital asset companies. Advantages and business examples.

• NFT enterprise

The British Virgin Islands (BVI) attracts many NFT businesses due to its straightforward company registration process and privacy protection policies. The BVI Business Companies Act (BCA) provides a fast and cost-effective method for company formation, which is ideal for NFT enterprises. Example: Larva Labs, the developer of the famous CryptoPunks NFTs, chose BVI as its registration location to benefit from its advantageous company registration and privacy protection policies. This enables them to manage their NFT business efficiently and securely.

• Virtual currency trading

The Financial Services Commission (FSC) of the BVI maintains an open attitude towards virtual currency trading businesses and provides some regulatory guidance, such as the Regulation of Virtual Assets Service Providers. Example: Bitfinex, one of the world’s largest cryptocurrency exchanges, is registered in the BVI. The regulatory environment in this jurisdiction supports virtual currency trading and provides a favorable foundation for its operations. Key company types and main setup requirements: The main setup requirements for a Business Company (BC) are:

• At least one shareholder
• At least one director
• Appoint a registered agent
• Provide a registered office address
• Submit the company’s articles of association

The setup time is fastest at 3-5 business days. The Isle of Man has clear regulatory policies for virtual currency businesses, ensuring market stability and investor protection. Additionally, the Isle of Man provides a high level of technical infrastructure support, making it suitable for blockchain project development. Advantages and business examples.

• Virtual currency trading

The Isle of Man Financial Services Commission (IOMFSC) regulates virtual currency trading under the Designated Businesses (Registration and Oversight) Act 2015, ensuring market stability and investor protection. Example: CoinCorner, a cryptocurrency exchange headquartered on the Isle of Man, operates under this regulatory framework, which supports virtual currency trading and ensures market stability and investor protection.

• Blockchain technology service provision

The Isle of Man provides a high level of technical infrastructure, making it suitable for the development of blockchain technology projects. For example, companies like CoinCorner have established blockchain technology services on the Isle of Man. Example: Quanta, a blockchain-based gaming company, operates on the Isle of Man. The island offers strong technical infrastructure and regulatory support for blockchain services. Key company types and main setup requirements: The main setup requirements for a Private Company (Ltd) are:

• At least one shareholder
• At least one director
• Appoint a company secretary
• Provide a registered office address
• Submit the company’s articles of association

The setup time is fastest at 5-7 business days. Bermuda has established a comprehensive regulatory framework for digital asset businesses, including the Digital Asset Business Act, ensuring the legality of various digital asset operations. The Bermuda government actively supports the development of digital assets and blockchain industries, offering various policies and resources. Advantages and business examples.

• Stablecoin

The Bermuda Digital Asset Business Act provides a comprehensive regulatory framework. Example: Circle, a leading digital currency company, is registered in Bermuda. The Digital Asset Business Act offers a thorough regulatory framework for managing its crypto assets and operations.

• Crypto-related cross-border payments

The Bermuda government actively supports crypto payments and other fintech innovations, such as the relevant policy and resource support documents issued by the Bermuda Monetary Authority (BMA). Example: Signature Bank, known for its blockchain-based payment solutions, operates in Bermuda. The government’s support for fintech innovation and favorable regulations contribute to their cross-border payment services. Key company types and main setup requirements: The main setup requirements for an Exempted Company (EC) are:

• At least one shareholder
• At least two directors
• Appoint a company secretary
• Provide a registered office address
• Submit the company’s articles of association
• Obtain a license from the Bermuda Monetary Authority (BMA)

The setup time is fastest at 4-6 business days. The Mauritius Financial Services Commission (FSC) has established a fintech innovation sandbox, providing a testing and development platform for blockchain and digital asset businesses. Mauritius has signed double taxation avoidance agreements with multiple countries, helping to optimize tax structures. Advantages and business examples.

• Crypto-related cross-border payments

The Mauritius Financial Services Commission (FSC) offers a Fintech and Innovation-driven Financial Services Regulatory Sandbox, allowing crypto payment companies to experiment in a controlled environment. Example: SALT Lending, a blockchain-based lending platform, operates in Mauritius. The sandbox environment provided by the FSC allows them to test and implement cross-border payment solutions securely and efficiently. Key company types and main setup requirements: The main setup requirements for a Global Business Company (GBC) are:

• At least one shareholder
• At least two directors, with at least one being a Mauritius resident
• Appoint a company secretary
• Provide a registered office address
• Submit the company’s articles of association
• Obtain a license from the Mauritius Financial Services Commission (FSC)

The setup time is fastest at 3-5 business days. Jersey offers advantages in establishing and managing digital asset funds, attracting numerous digital asset fund management companies. The Jersey Financial Services Commission (JFSC) has established a detailed regulatory framework for digital asset businesses, ensuring legality and compliance. Advantages and business examples.

• crypto funds

The Jersey Financial Services Commission (JFSC) Guidance Note on the Regulation of Crypto-Assets provides a clear regulatory framework, and its fund management legal framework allows crypto assets as investment targets, supporting the establishment of crypto funds. Jersey has attracted many crypto funds, such as CoinShares.

Example: CoinShares, a major digital asset management company, operates in Jersey. The island’s crypto asset regulatory framework enables CoinShares to effectively structure and manage crypto investment funds.

• Blockchain technology service provision

Jersey actively promotes the application of blockchain technology in financial services, with the JFSC providing detailed regulatory guidance. Example: Global Advisors, a blockchain-focused asset management company, is headquartered in Jersey. The island provides a supportive environment for developing blockchain technology services. Key company types and main setup requirements: The main setup requirements for a Private Company (Ltd) are:

• At least one shareholder
• At least one director
• Appoint a company secretary
• Provide a registered office address
• Submit the company’s articles of association

The setup time is fastest at 5-7 business days.

Brief description

Guernsey encourages the use of blockchain technology in areas such as financial services and supply chain management. The regulatory authorities in Guernsey have an open attitude towards new fintech and digital asset businesses, continually updating regulations to meet market demands.

Advantages and business examples.

• Blockchain games

Guernsey’s Digital Greenhouse program supports the application of blockchain technology in various fields, including the gaming industry. Guernsey encourages technological innovation and provides legal and policy support for this. Example: Traktion, a blockchain-based game development company, is registered in Guernsey. The island’s supportive environment for technological innovation helps companies like Traktion develop and launch blockchain games.

• NFT enterprise

The regulatory guidelines on digital assets issued by the Guernsey Financial Services Commission support the development and trading of NFT projects. Example: KnownOrigin, an NFT marketplace platform, benefits from Guernsey’s favorable regulatory stance on digital assets, providing a solid foundation for its operations. Key company types and main setup requirements: The main setup requirements for a Private Company (Ltd) are:

• At least one shareholder
• At least one director
• Appoint a company secretary
• Provide a registered office address
• Submit the company’s articles of association

Establishment timeThe fastest is 3-5 working days

How to choose an offshore location?

Choosing the right offshore jurisdiction for registering a company is a crucial step for Web3 enterprises on the path to success. Each offshore jurisdiction offers its unique regulatory framework, tax policies, and legal advantages. Companies should make the best choice based on their development needs, business model, and compliance requirements. Whether seeking tax benefits, reducing legal risks, or pursuing greater market access, each jurisdiction presents thoughtful advantages and potential challenges. For more detailed guidance on making the best choice, please consult Mankun Law Firm.

This article is an original piece by Shanghai Mankun Law Firm and represents the author’s personal views. It does not constitute legal advice for specific matters. Web3 practitioners are welcome to contribute or provide insights. For reprints and legal consultations, please contact customer service: MankunLawFirm

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