The legal regime of cryptocurrencies and digital assets in different jurisdictions. Part I: Introduction

You've built the website architecture, written the white paper, and already developed the first products and applications, but you still don't have a company? Selecting the most suitable jurisdiction is one of the main concerns of our clients.

One of the advantages of businesses operating on blockchain and creating, using or trading cryptocurrencies or other digital assets is that they do not necessarily require a physical presence, and are therefore characterised by great flexibility in choosing the most suitable jurisdiction or form of incorporation for the specifics of the products created.

Moreover, the teams working on such projects are usually made up of citizens of different jurisdictions. Consequently, the tax regime applicable to the individuals involved in the project varies depending on their place of residence, and is distinct from the company's own tax regime.

Choosing the most suitable jurisdiction is essential, given that the era of blockchain technology is still in its early stages, and states' differing approaches to regulating this technology have created a diversity of legislative frameworks, and, implicitly, of rules or the lack thereof.

The choice of jurisdiction must take into account numerous aspects, including which countries the target audience is located in. If, for example, you want the token you have created to be available to US citizens, or to run an ICO (Initial Coin Offering) open to American citizens as well, you generally need to hold a licence. However, not every country grants licences for this type of activity. Some states still have no legal framework at all governing such activities.

Other relevant aspects in choosing the jurisdiction are the type of product you are developing or the type of token or coin that will function within your business's ecosystem. Is it a utility token or a governance token? Could your business's funding model lead the authorities to classify or assimilate the token or cryptocurrency with assets, requiring a licence for trading? Do you want to create an exchange, an NFT trading platform, service intermediation through smart contracts, or crypto lending and flash loans?

Every blockchain business raises a series of legislative challenges and dilemmas. That is why we are helping our clients, as well as interested readers, through a series of articles in which we will present various crypto jurisdictions from the perspective of their legal and tax regimes.

The first jurisdiction with which we will open this series is Romania itself, so stay tuned!