Legal issues are without a doubt the most challenging aspect of an STO launch. Projects must select the country from which they want to launch carefully; the success of the project might hinge on that decision. Each jurisdiction has its advantages and disadvantages, so decision makers must carry out in-depth analysis of each option, keeping in mind the main variables they want to optimize for. Cost, reputation, stability and ability to market the STO are some of those variables. Many projects don’t even realize that, just because they are focused on their product. Therefore, we decided to take a brief look at some of the leading jurisdictions from which a project can launch and STO, to help decision makers get their research started.
Avoid the US?
One of the most important factors in looking for these jurisdictions is to understand in which way they help or hinder a project’s ability to look for investors in the US. After all, the US is one of the biggest – if not the biggest – sources of venture capital, so launching without access to US-based accredited investors, can put a project at a disadvantage from the get-go. Unfortunately, complying with US regulatory requirements in order to launch an STO, is a costly exercise, so most projects avoid the US and simply refrain from pitching their products to US-based investors.
Europe: The Cradle of the STO
Instead, a significant number of STOs are looking to launch from Europe, where they can also find substantial funding as well as lower compliance costs and friendlier regulation. It seems that Europe in general will become the cradle of the STO, but there are still some key differences between the most sought-after jurisdictions in the old continent. Here is a breakdown of the best countries to launch an STO from in Europe and a brief list of advantages and disadvantages:
Lithuania: The EU Gateway
The most fundamental distinction that projects must look for when they consider launching from a European country, is whether or not this country is a member of the EU. Launching an STO from within an EU country, will grant the project automatic access to investors in the rest of the union. Recently, the EU has declared that STOs will be part of their securities laws, which means projects must submit a prospectus. Nevertheless, within the EU there are countries that have more progressive regulation within the same EU legal framework than others.
That is the case of Lithuania, which is eager to enter the blockchain era as a leader. In terms of reputation, most people would overlook the small Baltic country for its lack of a track record as a place with financial advantages. Nevertheless, its low business tax rates, institutional support for STOs and a free opinion from regulators regarding the standing of a given token as a security, are substantial advantages that must be considered.
Switzerland: The Eternal Financial Haven of the World
Staying within Europe but stepping out of the EU, Switzerland is emerging as the most favorable country to launch an STO from. This country has taken the lead in terms of its openness to cryptocurrency, blockchain technology development and the creation of a favorable environment – both from the regulatory and business perspectives – for the creation of new blockchain-based start ups. The town of Zug near Zurich is now dubbed “Crypto Valley” for its ability to attract ICOs, STOs and other cryptocurrency projects.
In terms of reputation, Switzerland is a world-renowned financial center. It is probably the most stable country from which a project can launch, with clear rules and excellent sources of funding. Launching a project from Switzerland might be more expensive and less attractive when looking at access to EU markets, but there is ample funding and unprecedented clarity, thanks to special regulatory measures that were recently enacted for the sake of the blockchain industry.
Elsewhere Around the World
Projects looking for other jurisdictions to launch from, will find that there are other options around the world. None are as advantageous as Lithuania or Switzerland. Israel, Singapore and Hong Kong are often mentioned as favorable jurisdictions to launch from.But a lack of regulatory clarity – Israel – or a stringent set of regulations – Singapore and Hong Kong – make it difficult for projects to launch from these jurisdictions, despite having ample sources of funding in all three of them.
The Best Place to Launch an STO From is…
Therefore, the best places to launch an STO from must be either Lithuania or Switzerland. Unless a project has a specific advantage if they launch elsewhere, or the financial muscle necessary to register as a security with the SEC, they should be looking at these 2 European countries.
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