Set up a Cryptocurrency Company in Liechtenstein
Set up a Cryptocurrency Company in LiechtensteinUpdated on Saturday 23rd February 2019
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Adding virtual currencies to the investment portfolio has become an increasingly popular business practice and it was also adopted in Liechtenstein. As a European financial center, the small country has the potential to become a crypto center and investors who wish to set up a cryptocurrency company in Liechtenstein have access to a wide range of opportunities.
Our team of attorneys in Liechtenstein highlights the main aspects when starting such a business and can help investors open a blockchain company involved in the development of cryptocurrencies.
Liechtenstein and the adoption of cryptocurrency
Entrepreneurs in Liechtenstein looking to invest in other classes of assets have started to explore the numerous possibilities offered by digital currencies. This also includes setting up a cryptocurrency company in Liechtenstein – a process regulated as per the incorporation of any other type of company but for which investors do need to pay attention to several aspects.
Hiring programmers and experts is an important step to handle when opening a cryptocurrency business. Building and developing a cryptocurrency and a cryptocurrency exchange is done by coding and building features. Planning the parameters of the blockchain is an important step, so hiring employees that can create and implement the needed algorithm is an important step and one that can help the company differentiate from others on the market. For example, many companies copy an existing code, but others choose to separate from Bitcoin and Litecoin and will change the algorithm.
Cryptocurrency development, although essential, is not the most crucial step in virtual currency set up. The company needs to have a long-term business plan and the developers need to keep this in mind. Raising awareness about the cryptocurrency is an important part of the process and it relies on building trust with the investors and potential miners.
Our team of lawyers in Liechtenstein can help you with particular information about the market regulations and how the provisions of the Financial Market Authority apply in your case.
Laws governing cryptocurrency companies in Liechtenstein
In August 2018, the Liechtenstein Government issues a draft version of the Blockchain Act. Its purpose is to encourage users and service providers in the field of cryptocurrency and blockchain and, in time, lead to a positive development of the token economy in the country. The Act includes a set of conditions for companies that offer blockchain and cryptocurrency services and we summarize some of these below:
- - Reliability: As defined in the Act, a natural person can offer blockchain services only if he is reliable and capable to act in this sense and, for legal entities in Liechtenstein, a condition is that the members of the management of the company need to be reliable.
- - Structure: What’s more, as defined in the Act, the service providers must have a well-established organizational structure and internal control policies.
- - Minimum capital: the capital for companies that provide these types of services should be 100,000 CHF; one of our lawyers in Liechtenstein can give you more details.
- - License: blockchain and cryptocurrency service providers need to apply for a license from the Financial Market Authority and must do so in writing; the Authority is responsible with the review of the applicant’s registration requirements.
The Financial Market Authority in Liechtenstein is the one entrusted with the implementation of the Blockchain Act as well as overseeing this particular sector that also includes cryptocurrency companies.
The fact that the government issued a draft law on these specific matters reflects the growing importance of blockchain technology and the fact that it is beginning to be perceived as beneficial for the economy. Service providers based in Liechtenstein already have access to a good business climate and the small country has a reputation as an important financial center in Europe. According to the new government decisions, cryptocurrency and initial coin offerings are to be regulated by the Financial Market Authority and a legal base will be set in place for the entire token economy. The aim of the lawmakers is to maintain Liechtenstein’s reputation as a financial center but also to find long-term solutions for the treatment of virtual currencies.
Cryptocurrency users will be protected by law and confidence in these types of transactions is highly valued. In fact, a trusted blockchain technology is one that can guarantee the integrity of the tokens. One of the experts at our law firm in Liechtenstein can give you more details about the legislative changes in this particular business field.
Opening a company in Liechtenstein
Cryptocurrency companies in Liechtenstein are oftentimes set up in the form or a private limited liability company. This business form has advantages both for the investors, who do not expose their own assets when incorporating and for the credibility of the business itself.
The new company in Liechtenstein needs to have a unique name, a bank account and be registered with the Commercial Register. Below, we summarize the main steps investors need to go through when starting a company in Liechtenstein, namely the limited liability company:
- - choosing a company name and reserving it;
- - preparing the company documents: these will include the Articles of Association, payment proof for the minimum share capital, director’s statements and specimen signatures, as needed;
- - applying for registration with the Commercial Register: this is done by submitting the application form, signed by the authorized persons, along with the company’s documents that have already been prepared;
- - apply for licenses: in the case of a blockchain or cryptocurrency company, the applications will be submitted to the Financial Market Authority.
Our attorneys in Liechtenstein can give you detailed information about each of these steps and first-time investors in the country can reach out to us if they have any questions or require specialized assistance for opening a cryptocurrency company.
Companies in Liechtenstein pay a low corporate income tax rate of 12.5%, one of the reasons why the small country is attractive to foreign investors and cryptocurrency and blockchain start-ups. Businesses that hire employees will also need to pay social security (slightly more than 50% of the security contributions are payable by the employer and the rest by the employee) and a payroll tax (on a monthly basis). For value-added tax purposes, Liechtenstein is considered part of Switzerland. One of our tax lawyers in Liechtenstein can give you more details in the tax laws applicable to companies.
As a crypto hub, it is expected that Liechtenstein will continue to grow. The small country has plenty to offer to investors and it has already succeeded in creating a supportive environment for crypto and blockchain companies. The country is one of those in Europe who has been strong supporters of this technology and government officials motivate their support through the fact that blockchain technology has many applications, not only those relating to cryptocurrency payments.
For further information on the requirements for incorporating a company, please contact our law firm in Liechtenstein.