Part 3. Meddling with legality
Since we wanted to run our business properly, the first thing we had to deal with was the legal system. We started looking for a country where the government treated crypto alike with other currencies. Many countries have proved to be more reasonable by imposing their regulation standards. Simply put, some politicians had spotted the circulation of money they could have gladly taxed; some banks went all excited, as they had spotted people making transactions and therefore they had been losing a part of their income, but… There is always a “but” and in this case it was decentralization and quite a high degree of anonymity, thus an absolute inability for the government to control it.
Nevertheless, some countries began setting their own loyalty programs and banks started cooperating with crypto owners in order to minimize the leakage of revenue. However, as often happens, at first they did not succeed. For example, some countries expressed the readiness to accept Bitcoin and other crypto as a currency, but they lacked banks willing to work with it, and vice versa. The most advanced countries were European ones, such as Swiss and Germany. However, there were some other nuances. For instance, if you wanted to introduce your own crypto, you would have to become a part of SRO, get a license and commit to paying duties and taxes regardless of the amount of income. And this is only a small part of problems one comes across while aims at working legally, especially considering the international format of work.
The resolution was as follows:
- Choosing the most suitable jurisdiction with the positive attitude to cryptocurrencies;
- No requirements to operate on the territory of that jurisdiction;
- Finding an opportunity to establish a company in another country;
- Choosing a bank with a greater potential for working with crypto and an opportunity to open accounts for foreigners.
But then we made another mistake. We failed to consider the factor of confidence in the foundingcountry. Our choice fell on the Cayman Islands and later we often saw the faces of our partners changing as we mentioned our jurisdiction, given that despite its loyalty to the crypto, this place had been an oasis for underground offshores. Undoubtedly, it damaged the reputation of the company.
Mistake 5. Choose the trusted country.
In our business starting a company is the initial part of work process, the next step is the legal justification of a token for an ICO.
As I mentioned in the previous chapter, there are two types of tokens – utility and security. If you claim your token as security, consider it the equivalent of security papers. Accordingly, soon you will likely acquire a fan club in the form of regulators, such as FTC (Federal Trade Commission), who will dig deep into your business before they invite you to go on a jail tour.
Besides, there is a good questionnaire, which can help you to find out the type of token you have. You should remember that even if you come up with a brilliant plan how to disguise the token, SEC would only estimate the result, i.e. the intention to reap the benefit. We chose the utility token so owner can claim our services with it.
The ATEC token complied with the following criteria:
- The token can not be used outside the website;
- It can be used for buying special services only within the project.
Further we realized that despite we had been doing our business fairly, investors did not show much interest for the ATEC token as they were used to “buy for $1, sell for $5” way of trading and remained indifferent to the social part of the project.
Mistake 6. ICO participants want to make a quick profit.
If you are interested to learn more details about the legal part of the ICO process, leave a comment and we will tell you about our experience. In the following chapter we will write about advisors and their significance.