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Initial Coin Offering in Ireland

Initial Coin Offering in Ireland

Initial coin offering (ICO) in Ireland designates a term through which a company can obtain funds from the public. This is done by issuing tokens or virtual coins that can be exchanged with other types of currencies, but in most cases, virtual currencies are used. When opening a company in Ireland that deals with ICOs, investors should also consider the tax regulations available for this type of business activity. 

However, it is necessary to mention that up until now, Ireland does not have a tax legislation which specifically addresses to ICOs; instead, the Irish Revenue Commissioners issued a guidance concerning the tax perspective on cryptocurrency investments, under the Taxation of Cryptocurrency Transactions (The Tax and Duty Manual); our team of consultants in Ireland company formation can offer in-depth information on the rules of law that can be applicable to Irish ICOs

Steps to create an initial coin offering in Ireland

The creation of an ICO in Ireland is a hybrid between the registration of a regular company and that of an investment vehicle when the business takes the form of a trading platform.

Here are the main steps you should consider when launching an Irish ICO:

  • – the company registration procedure which is the same as for all other types of businesses;
  • – the licensing/authorization process (if the company will operate as an exchange trading platform).

What should be noted is that in order to open the ICO, the business owner or owners must first create their own virtual coins. However, it is possible to trade existing cryptocurrencies, such as Bitcoin or Ethereum, two of the most used digital money.

Our Irish company formation specialists can help you register the type of company you need to operate an ICO. With respect to the authorization phase, licenses are issued by the Central Bank of Ireland provided that specific requirements are met.

Legislation on virtual currencies and the creation of Irish ICOs

Virtual currencies are being widely used all over the world, yet there are no specific laws to regulate their trading on the market. An initial coin offering implies the creation of a cryptocurrency and its sale on specific platforms. In exchange, those who buy it can obtain various benefits of financial or other nature.

Given the fact that there are a few countries in the world to have specific laws governing the issuance, trading or use of cryptocurrencies and that Ireland is an EU member state, it has not issued a regulation on the activities of ICOs.

The main laws governing such operations are related to a few European directives and regulations that apply to the financial sectors, as follows:

  1. Directive 2014/65 on Markets in Financial Instruments;
  2. Directive 2009/110 on Electronic Money;
  3. Directive 2015/2366 on Payment Services;
  4. Directive 2014/506 on Market Abuse Regulation;
  5. Directive 2014/909 on Central Securities Depositories;
  6. Directive 2017/ 1129 on the Prospectus Regulations.

What should be noted is that not ICOs need to obtain authorization from the Central Bank, but only those trading cryptocurrencies that can qualify as financial instruments.

Ireland is at the forefront of financial innovation in Europe and creating an initial coin offering here is very appealing for most investors seeking to obtain funding for their projects. ICOs can also be treated the same way as investment funds, more specifically cryptocurrency hedge funds.

If you want to open a company in Ireland in order to create an ICO, feel free to address our local consultants. We usually recommend using the private limited liability for this purpose.

Types of crypto assets that can be used in Ireland

Ireland has adopted the model of other countries when it comes to the types of crypto assets that can be traded through initial coin offerings, among which:

  • – cryptocurrencies that can be used as financial instruments or as means of storing money;
  • – investment tokens that can be used to hold various rights;
  • – utility tokens that can be used in exchange for products or services.

What are the advantages of Irish ICOs? 

One of the advantages of starting an ICO investment in Ireland is given by the fact that, under the view of the Irish legislation, certain types of ICO activities can be exempted from value added tax; however, a close analysis regarding this matter should be conducted in order to verify if the specific ICO activity developed here is actually exempted from this tax and our team of specialists in company registration in Ireland can further advise on this matter. Other relevant advantages of Irish ICOs are presented below: 

  • ICOs investments can be very attractive in the field of blockchain technologies;
  • ICOs can benefit from a faster fundraising activity compared to the traditional means of obtaining capital;
  • • businessmen investing in ICOs can easily target their investment markets in the online environment;
  • • there are more types of tokens used for ICOs, such as the utility tokens and the security tokens

Do ICOs activities need to be licensed in Ireland? 

There is no statutory legislation regarding the issuance of a license for the operator of a digital platform issuing ICOs. However, investors may need to obtain an authorization for their transaction platform, depending on the nature of their digital assets. In the situation in which such assets are considered transferable securities, the operators will need to be registered with the institutions.

Irish citizens’ interest in cryptocurrencies has increased

According to surveys, 18% of the Irish population owns some type of cryptocurrency. According to a report dated April 2022:

  • – 58% of the respondents are interested in knowing more and even acquiring virtual money in the next 12 months;
  • – the average crypto investor in Ireland is 36 years old and an income ranging from €26,000 to €64,999 per year;
  • – 79% of the surveyed people keep their crypto assets as long-term investments, while 39% of them are active traders.

We invite any businessman interested in this subject to contact ourIrelandcompany formation experts for professional consultancy services addressed to this sector.