The perfect gateway to do business and
Trade Bitcoin in the European Union
Open a Cryptocurrency Company in Ireland
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Cryptocurrency Trade and
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& Broker License
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A Location for E-Money and Payment Institutions
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Estonia, a new European Crypto Market - Starting a Crypto Currency Company in Estonia with Exchange and Wallet Service Provider License
Key points for Cryptocurrency Company structure
Expected TimeframeFor further Information … Click Here!
Regulatory Oversight as a means of Attracting Business
Designated Business Registration Policy
IOMFSA Changes – 5th October 2018
How long will an Application take?For further Information … Click Here!
Open a Cryptocurrency Company in Ireland
Why Register a Bitcoin Company in Ireland?
Cryptocurrency Regulation 2019 Taxation
Anti-Money Laundering Requirements
Ownership and Licensing Requirements
Passporting RightsFor further Information … Click Here!
New Guidance on Cryptocurrencies and Initial Coin Offering (ICO)
Exchanges, Wallets, Broking
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Initial Coin Offering (ICO)
Types of Financial Product
Tokens that are not Financial Products
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Cyprus Investment Firm (CIF)
Cyprus Strategic Advantages
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Mauritius Investment Dealer & Broker License
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Under the Security Act
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Mauritius Investment Dealer & Broker License
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Institutions (EMI - PSP)
Irish Regulator and Issuer
Electronic Money Institution (E-Money) License
Documents and Information Required
Initial capital requirement
Summary of the Key Stages in the Application Process
Key Stages in the Application Process
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Funds in the British Virgin Islands
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Luxembourg Private Asset Management Company (SPF) - The Concept
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Luxembourg Private Asset Management (SPF)
Luxembourg SOPARFI (Société de Participations
Financières) - The Concept
Luxembourg Holding (SOPARFI)
The UK and Ireland are key jurisdictions in the development of the sector. The firm’s presence in both Dublin and London combined with the team’s cryptocurrency and blockchain experience, uniquely positions us to meet the ever-changing demands of companies and individuals involved in this area.
The crypto market has proved to be a lucrative industry on a global scale. Ireland stands as one of the major European markets for cryptocurrency companies. The country even has its own virtual currency known as the Irish coin. However, it also supports most of the major cryptocurrencies such as Bitcoin and Ethereum. In Ireland’s major cities such as Dublin, you will even find a bitcoin ATMs.
Ireland is the perfect gateway to do business and trade Bitcoin in the European Union;
One of the oldest bitcoin services providers, BitEx is based in Ireland;
Ireland hosts multiple global financial and information technology giants;
Corporate taxation in Ireland is low at 12.5%;
Blockchain Association of Ireland is bullish about the current state of the world’s most popular crypto- currency;
The Central Bank in Ireland considers implementing a bitcoin recognition procedures.
Set up a Bitcoin Company in Ireland takes just 2 weeks to complete without personal travel required.
There is no specific cryptocurrency regulation in Ireland, but there is also no specific prohibition in Ireland on any activities related to cryptocurrency.
The CBI (Central Bank of Ireland) is the competent authority in Ireland for the regulation of financial services including electronic money, payment services and securities law. The CBI has yet to indicate the extent to which existing financial regulation will apply. The CBI has issued warnings in relation to ICOs and cryptocurrencies and has also contributed to the European Securities and Markets Authority (ESMA)'s warnings to both consumers and to firms engaged in ICOs.
In respect of cryptocurrency regulation, we expect that the CBI will focus on securities law and the recognised EU concepts of "transferable security" and "financial instruments" as defined in the 2014 European Union Markets in Financial Instruments Directive (MiFID II) and the characteristics which they view as bringing cryptocurrencies or tokens within those definitions. Depending on their structure, cryptocurrencies could be classified as transferable securities, which would bring them within scope of a range of securities laws. For example, the issuer of a cryptocurrency may be required to publish a prospectus (or avail of an exemption) prior to their being offered to the public, or certain activities in respect of the cryptocurrency may require authorisation as an investment firm under MiFID II.
A pure, decentralised cryptocurrency is unlikely to be a transferable security, while a token with characteristics a traditional share or bond may be. It is also possible that true "utility" tokens intended for exclusive use on a platform or service will not be transferable securities. The definition of transferable security is non-exhaustive, and it is for each issuer and their advisers to determine whether their cryptocurrency or token is a transferable security.
As in many jurisdictions, the regulatory environment in relation to cryptocurrencies and their interaction with securities law is not yet settled and ESMA acknowledges that depending on how an ICO is structured, it may fall outside the regulated space entirely.
According to Revenue, while companies are entitled to prepare their accounts in a currency other than euro, they are not entitled to do so in crypto - “Accounts, for tax purposes, cannot be prepared in cryptocurrencies: euro or functional currency accounts must be prepared”.
And when it comes to making a gain on a cryptocurrency, the Revenue guidance states that individuals will be subject to capital gains tax at a rate of 33% on gains, while losses will be allowable against offsetting CGT bills. For companies, chargeable gains will be subject to corporation tax 12,5%.
On VAT, Revenue says that as bitcoin and other crypto currencies are deemed to be “negotiable instruments”, they are exempt from VAT. This means that those engaged in exchanging cryptocurrencies won’t be subject to VAT.
In cases where employees are paid in bitcoin, the amount must be converted to euro at the time of the payment so that income tax can be calculated.
The territoriality aspect of cryptocurrencies is still an involving area. In the case of an Irish resident (and for an individual ordinarily resident) person, they will usually be liable to tax in Ireland on their worldwide income and gains (subject to any reliefs or exemptions, including double tax treaty reliefs). A non-resident person will generally only be subject to tax on Irish-sourced income or gains, or profits of an Irish trade. (In the case of individuals, tax may also apply where amounts are remitted into Ireland.) It is evident therefore that understanding the source or situs of cryptocurrencies is of significance in international dealings. This is likely to be an area that will be developed further.
There is a risk that certain ancillary services in connection with cryptocurrency could be subject to regulation as a form of money remittance or transmission under the Payment Services Directive (PSD) or, where PSD does not apply, under the Irish regulatory regime for money transmission. For example, the operator of a cryptocurrency platform who settles payments of fiat currency between the buyers and sellers of cryptocurrency could be viewed as being engaged in the regulated activity of money remittance/transmission. There are
The application of existing Irish anti-money laundering requirements to cryptocurrencies is unclear due to uncertainty surrounding the regulatory status of cryptocurrency. Where the cryptocurrency or any activity relating to it is subject to regulation (e.g. it has the characteristics of transferable security), then Irish anti-money laundering requirements will apply.
The 5th Anti-Money Laundering Directive (AMLD5) will impose new anti-money laundering requirements on cryptocurrency exchanges and custodians operating in Europe. AMLD5 has not yet been implemented in Ireland.
In principle, there are no specific ownership and licensing requirement set outcryptocurrency. More specifically, while heavily regulated retail funds (e.g. UCITS funds) have specific restrictions on the type and diversity of assets they can hold, which restrictions would likely exclude cryptocurrencies, there are no generally applicable restrictions on investment managers owning cryptocurrencies for investment purposes. In addition, no specific licensing requirements are imposed on anyone who holds cryptocurrency as an investment advisor or fund manager.
There are no restrictions in Ireland on the mining of cryptocurrency. As noted above in the "Cryptocurrency regulation" section, the regulatory status of cryptocurrency in Ireland is uncertain. It is likely that the focus going forward will be on securities law.
Mining of cryptocurrency is a technical process relating to the release of new cryptocurrency and the tracking of cryptocurrency transactions on a blockchain. Where the cryptocurrency is a form of transferable security, the mining activity could be viewed as a form of securities settlement system. However, as the mining is carried out on a decentralised basis, it does not fi t neatly into any existing regime for securities settlement. On that basis, we would view mining as an unregulated activity under Irish law.
In Ireland, there are no border restrictions or obligations which are specifically aimed at cryptocurrencies. The traditional reporting requirements for "cash" (which is defined as currency, cheques and money orders or promissory notes) when entering or leaving the European Union do not apply to virtual or cryptocurrencies. This is because they are deemed to be neither "cash" nor "currency".
Further Expand into Europe
For further expand into Europe, Cryptocurrency exchanges are required to hold an e-money license from the Central Bank of Ireland; this license will help the exchange expand its Irish operations, as well as allow it secure passporting for customers across the European Union (EU) and the European Economic Area (EEA).
Passporting allows a firm registered in the European region to do business in any other member state without the need for further authorization from each country.
In respect of financial regulation, there are currently no specific reporting requirements relating to cryptocurrencies. Where the cryptocurrency or any activity related to it is subject to regulation, then Irish anti-money laundering requirements will apply. This will include obligations to submit suspicious transaction reports to the Garda Síochana and the Revenue Commissioners.
Central Bank of Ireland warns certain firms need to register for AML purposes; a number of firms will need to register with the Central Bank as ‘Schedule 2 firms’.
The Central Bank of Ireland has posted a guidance for registration of the so-called “Schedule 2 Firms”. This type of registration must be done for anti-money laundering (AML) purposes.
The regulator explains that, on November 26, 2018, Section 108A of the Criminal Justice (Money Laundering and Terrorist Financing), (Amendment) Act 2010 introduced for the first time a statutory requirement for certain firms to register for anti-money laundering purposes with the Central Bank of Ireland. The central bank is the competent authority in Ireland for the monitoring and supervision of financial and credit institutions’ compliance with their obligations under the Act. The Central Bank is empowered to take measures that are reasonably necessary to ensure that credit and financial institutions comply with the provisions of the Act.
If a firm offers any of the following services and it is not otherwise authorised or licenced to carry on business by the Central Bank, then it will need to register with the Central Bank as a ‘Schedule 2 firm’.
Schedule 2 Activities:
1. Lending including inter alia: consumer credit, credit agreements relating to immovable property, factoring, with or without recourse, financing of commercial transactions (including forfeiting).
2. Financial leasing.
3. Payment services as defined in Article 4(3) of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 200714 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC.
4. Issuing and administering other means of payment (e.g. travellers’ cheques and bankers’ drafts) insofar as such activity is not covered by point 3.
5. Guarantees and commitments.
6. Trading for own account or for account of customers in any of the following:
Money market instruments (cheques, bills, certificates of deposit, etc.)
Financial futures and options
Exchange and interest-rate instruments
7. Participation in securities issues and the provision of services relating to such issues.
8. Advice to undertakings on capital structure, industrial strategy and related questions and advice as well as services relating to mergers and the purchase of undertakings.
9. Money broking.
10. Portfolio management and advice.
11. Safekeeping and administration of securities.
12. Safe custody services.
13. Issuing electronic money.
There are some exemptions from the Obligation to Register. If a firm is carrying out the Schedule 2 activities, the obligation to register does not occur if the firm falls into any of the following exemptions:
If the firm only carries out Schedule 2 Activity 6 above (the “Trading for own account or for account of customers…”), or
If the firm’s customers (if any) are members of the same group as the firm, or
The firm’s annual turnover is less than €70,000, and
The total of any single transaction, or serious of linked transactions in relation to the firm’s Schedule 2 activities does not exceed €1,000, and
The firm’s Schedule 2 activities do not exceed 5% of the firm’s total turnover, and
The firm’s Schedule 2 activities are directly related to and ancillary to the firm’s main business activities, and
The firm only provides Schedule 2 activities to customers of the main business activities, rather than the public in general.
Firms that need to register with the Central Bank as a Schedule 2 firm must do so by using the Schedule 2 Registration Form.
The Central Bank notes that it will not commence the processing of any registration until all required information in the registration form as been completed. Incomplete registration forms will be returned without review.
All herein above information contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
Setting up your EMI License in Ireland
Our experienced staff offer regulation related services in Ireland and many other popular jurisdictions as well and can therefore advise Clients who have not decided on the most suitable jurisdiction yet on what the most beneficial jurisdiction is.
We offer solutions to clients by combining the traditional legal fabric with new technologies.
If you would like more information about registering a digital currency trading company in Ireland, and getting a bitcoin company license, we welcome you to get in touch with our Business Development Managers.
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