Blockchain has really changed the path of the technology world in many different ways and bitcoin is one of the by products of blockchain technology whose end result was more than just a digital currency revolution. Companies across the globe have explored the potential of blockchain technology in a range of different sectors, including cars, phones and a multitude of disruptive alternatives in banking, government and as well as shipping. Not only the small startups, but rather big giants and massive business chains like Microsoft, Amazon, Walmart, and Alibaba are endorsing cryptocurrency and switching over to blockchain solutions for all sorts of functions within the organization. But still, these organizations are facing problems and have barriers in different countries. These companies are still trying to negotiate an ever expanding regulatory framework that is growing at different rates across different borders.
In this huge surge of blockchain technology, different countries and governments behaved differently according to their laws and regulations. Crowd funded startups are not easy to operate due to the complex legislation by different regulators. From the SEC to the Chinese government’s hard clampdown on ICOs to Malta and Switzerland competing to be the premier destination for fintech and blockchain, different nations have taken widely different views on how to regulate, quash or support blockchain startups. However due to global nature of blockchain products, it is useless to worry about a regional customer, but rather it is important for blockchain projects to examine the legislation, the atmosphere and approach from the community, fees, and other factors in different countries to see which will aid them in getting their desired outcomes.
Some favorable destinations for blockchain startups
The different approaches by governments and regulators have created what has sometimes been referred to as ‘cryptocurrency havens’, as nations look to try to attract fintech and blockchain projects to their shores in the hope of using a potential financial revolution to boost their own agendas.
there are countries that are trying to discourage and scare away of as many blockchain projects as they can, and it has been successful in many cases.
One of the first countries to encourage and welcomed any blockchain project and offered a regulatory framework for blockchain projects and a crypto friendly space was Switzerland.
Switzerland, blockchain & crypto valley
Switzerland has been considered as the silicon valley of blockchain Market. On that note, we can call it crypto valley. Last year in July, in the small town of Zug, Switzerland put in place options for companies that accumulated around $1 million in third party funds to test out their innovative financial technology ideas without the usual regulation surrounding finance and digital currency. They also concluded that banking licenses would be re-evaluated in order to allow these companies earning less than $1 million to obtain licenses for depositing and allowing crowdfunding donations to be withdrawn over a period of 60 days rather than the previous seven days.
Instead of creating new blockchain-related legislation, which as with every new legislation leads to uncertainty regarding the specific application, Switzerland applies the existing regulatory framework, but with a flexible and principle-based approach
Since Switzerland started making life easier for the blockchain and fintech companies, there has been a big boom in these innovative projects. Stephen Meyer, a legal professional and Ph.D. candidate in blockchain & law living in Zurich Switzerland, has seen both the advantages and disadvantages of launching a blockchain project in the small European nation.
Switzerland has a very clear regulatory situation based on the Swiss financial authority FINMA’s ICO Guidance of February 2018. Also, one of the major benefits is the possibility of receiving an individual pre-ruling by FINMA. Every crypto team can describe its project, send it to FINMA and will usually receive within 4-8 weeks a clear statement whether regulatory provisions are applicable Stephen Meyer, A Legal Professional
While considering what Switzerland is doing, and then evaluating how other nations are trying to replicate and even trying to beat it, there is this feeling of competition. Switzerland’s parliament is pushing the government to be the leader in blockchain growth of the world.
Island of Malta
Another country who supported and attracted blockchain companies is probably the small mediterranean island of Malta. A look at the cryptocurrency headlines surrounding Malta shows some impressive growth for blockchain and fintech on the island. The biggest indicator was probably when Binance, the world’s biggest cryptocurrency exchange, decided to open an office in Malta due to building regulatory pressure in Japan.
What distinguishes Malta from the rest of other jurisdictions when it comes to blockchain and cryptocurrencies put simply is the fact that the government, the opposition and all regulatory authorities are pulling the same rope together, chasing one single vision: making Malta one of the leading countries in the space.
Due to these positive pieces of legislation has encouraged the companies and seen a flood of interest in Malta as a premier destination for blockchain and ICOs.
Partly favorable legislations in the United States
The U.S. is a major player in both the cryptocurrency and blockchain ecosystems, with the majority of ICOs from the last 18 months originating in the U.S. making 16% of all global ICOs. However, the U.S. has been fighting a big battle with ICOs thanks to its Securities Exchange Commission’s definition of what a newly founded virtual currency can be classified as. The SEC, however, found that, in a major precedent setting decision, that the decentralized autonomous organization (DAO) tokens, that were issued in 2016 were securities. This essentially lumped the majority of ICO projects as securities and put them under the scrutiny of the regulator
The biggest problem with ICOs is that many of them are being done in clear violation of U.S. securities laws. Whether the issuers are unaware or agnostic to the potential consequences of issues unregistered securities, without a exemption from Section 5 registration. Many ICO issuers have ignored the requirements of the raising capital in the U.S.
The major difference between blockchain technology and U.S. legislation is anonymity, which is kind of illegal in the U.S. but it is the major characteristic of blockchain technology. There is a path for ICOs to function in a popular ICO country, but the regulatory hoops go against the core values that the crypto community holds dear.