If you plan to launch an initial coin offering (ICO) in Labuan and want to ensure that your operations are compliant with the law, you can choose our company formation services in Labuan. The territory offers a Credit Token License, which can be used to legalize your utility ICO. This license provides a regulatory framework and helps make your ICO operations safer and more compliant with the relevant laws and regulations.
What is an ICO in Labuan?
An ICO in Labuan refers to the process by which a company or entity raises capital by issuing digital tokens or coins to investors in exchange for funds. Labuan has established a regulatory framework governing ICOs within its jurisdiction. This framework aims to provide legal clarity and investor protection in the rapidly evolving field of cryptocurrency and blockchain-based fundraising. The Labuan Financial Services Authority (LFSA) acts as the financial services regulator, overseeing and facilitating business activities in the region.
ICO typically involves opening a company in Labuan and creating and selling digital tokens to interested investors. These tokens often represent a stake in the company’s project, platform, or ecosystem. The money raised through the ICO are used to fund the development of the investment.
ICO in Labuan requirements
To conduct an ICO in Labuan, you need to set up a company in Labuan and obtain a Credit Token License.
However, specific eligibility criteria must be met. The company must have a minimum capital of MYR 300,000 and possess a 3-year profitable track record. Alternatively, if it’s a newly established startup, it should have an innovative business model within the fintech or blockchain space. Additionally, there must be a clear and viable token economy model justifying the issuance of a utility token.
Regulated ICO providers from other jurisdictions must have approval from their home authority, accompanied by a letter of consent. Additionally, you must obtain approval from the Central Bank of Malaysia.
Companies must have an operational office in Labuan, and all transactions related to their ICO activities must be conducted to, through, and from Labuan. We can help you find an office once the company incorporation in Labuan process begins.
Launching an ICO in Labuan
After obtaining the license and meeting all the regulatory and operational requirements outlined by the LFSA, companies are authorized to proceed with launching their ICO in Labuan.
Companies are allowed to transact in foreign currencies, including the Malaysian Ringgit, and can engage in transactions with Malaysian residents, including authorized dealers approved by the Malaysian Exchange Control.
Businesses are also required to appoint an approved external auditor to conduct an annual audit of their operations. They must also maintain separate accounts for clients’ funds and report all withdrawals within three working days.
Finally, businesses holding a Credit Token License must pay an annual license fee of MYR 40,000 to FSA to continue their ICO in Labuan.
Statistics about Labuan companies
The territory is an attractive destination for those looking to engage in token fundraising activities, and also for investors looking to set up a company in Labuan. Here are some statistics related to Labuan companies and their growth in recent years:
- There are 14 Labuan Credit Token Companies as of October 2023.
- There were 4,847 total active companies in Labuan in 2022.
- In 2022, there were 111 digital financial services providers.
- In 2022, Labuan digital financial services registered a remarkable 22% growth from 2021.
If you are interested in learning more about ICO in Labuan or need assistance in establishing a Labuan offshore company, please contact our team.