Affinity provides tailored regulatory advice and structures to suit each client’s individual requirements, with optimum focus on reaching the client’s end goal and applying innovative tax efficient solutions whilst operating within the relevant rules and regulations.
We have built a prestigious reputation in regulated sectors for our expert knowledge and exceptional service, which has led to many organic referrals. Our Group boasts three reputable jurisdictions in the regulated industry, the Cayman Islands, Malta and the Isle of Man. The jurisdictions have all fostered friendly and secure regulated environments to welcome fintech, blockchain and cryptocurrency companies. In addition to being recognised financial centres with advantageous regimes and vehicles.
Our relationship with industry bodies and our close network of intermediaries trust our business and support our services. We have worked on a number of innovative cases within the fintech sector, one example is assisting a client in obtaining the first issued token-based software supply licence in the Isle of Man.
“Affinity work closely with key regulatory bodies such as the Isle of Man Financial Services Authority and the Isle of Man Gambling Supervision Commission (“GSC”) to ensure that clients receive prompt regulatory advice in order to reach their end goal. Affinity have worked on a number of innovative cases, and are proud to have assisted Blockchain Isle of Man’s stalwart applicant, FunFair Technologies (“FunFair”). Affinity assisted FunFair with becoming part of Blockchain Isle of Man’s regulatory sandbox and also with obtaining the GSC’s first token-based software suppliers licence. Affinity’s partnership with the Department for Enterprise and Blockchain Isle of Man continues to flourish in this ever growing sector. After building such a reputation, our team continues to grow from strength to strength in order to meet clients expectations with our personal bespoke service.”
A prestigious jurisdiction which is regarded globally for digital innovation is the Isle of Man. At the forefront of the industry, the jurisdiction holds a developed fintech sector which is a diverse landscape of businesses utilising virtual assets, such as virtual asset payment service providers, virtual asset exchanges and blockchain startups.
An established financial centre with a competitive fiscal regime, the jurisdiction offers world-class infrastructure that supports technology based innovation.
The forward-thinking Government is a driving force behind the jurisdictions fintech sector, in which they have created a blockchain office and sandbox testing environment, which has attracted many innovative start-ups in the space.
The Islands advanced telecommunications infrastructure has been used as a test bed for emerging technologies and new businesses establishing on the Island can apply to the Isle of Man Government for financial assistance in the form of grants or loans.
They push for new exploration and creativity in financial innovation by running fintech initiatives, an example is The 2022 Fintech Innovation Challenge. In collaboration with Digital Isle of Man, Finance Isle of Man and the Isle of Man Financial Services Authority, applicants will share a business proposition which is an innovative solution, with one winning the opportunity to bring their business idea to the market.
The Government provides information on the licence application, legislative and regulatory framework. They also encourage new business in the space by offering various funding options.
The jurisdictions regulator, The Isle of Man Gambling Supervision Commission, became the first jurisdiction in the world to issue a Blockchain gambling business with a gambling licence and the first jurisdiction to regulate token based software suppliers.
We were fortunate enough to assist with this case, which is a testament to our leading position in the sector and established relationship with the regulator.
Such developments validate the Isle of Man’s leading position in the fintech sector.
Globally regarded for robust regulation, the Isle of Man was one of the first jurisdictions in the world to bring in regulation on any businesses carrying out activity on virtual assets. In 2015, they introduced the registration regime titled, the Designated Business Act.
A testament to the jurisdictions credibility and excellent standards, the purpose of the regulation was to ensure compliant AML/CFT measures on the use of virtual assets to maintain the jurisdictions transparent reputation.
The Isle of Man Financial Services Authority has defined convertible virtual currency activity as; issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including cryptocurrencies, virtual assets or similar concepts where the concept is accepted by persons as a means of payment of goods or services, a unit of account, a store of value or a commodity.
In order to set up a fintech business on the Isle of Man, it must register under the Designated Businesses Act (2015) which applies to all businesses and professions carrying out activities that fall under the definition of a “designated business” to register with the Isle of Man Financial Services Authority (FSA). Within the category of designated business activities includes ‘Convertible Virtual Currencies’.
To do this, a business must register a business representative person on the DNFBP Portal and provide the following information; the business details, including the activities and business structure, a risk assessment form including the procedures, business profile and client base, and a specified person questionnaire including details of the specified persons associated with the business. A full user guide on this can be found on the FSA website. Once this is complete, the Authority will decide if the business falls within the “designated business” requirements to be registered under the Act.
An initial registration fee is required and the business will thereafter be required to pay annual fees if the business is overseen by the Authority. Or the designated business is overseen by a professional body, which will require annual fees for their services.
As a leading Corporate Service Provider in the fintech sector on the Isle of Man, we have assisted many clients with bespoke structuring in establishing fintech entities, and have worked on numerous innovative cases across specific areas of the fintech industry, including blockchain, cryptocurrency licensing and ICOs.
We provide our clients a personal service, which involves close support and guidance through applying for the Designated Business Act and every stage thereafter.
Malta is quickly becoming a jurisdiction of choice when deciding where to set up a Fintech entity. A recognised hub for business and one of the fastest-growing finance centres, its developed infrastructure and pool of experienced professionals, are well-equipped to support innovation in technology.
Malta is a regarded as a leading crypto-friendly jurisdiction globally, which is due to the pro-active approach in implementing legislation in issuing cryptocurrencies.
The jurisdiction offers businesses a competitive fiscal regime, a variety of flexible structures and robust regulation. Its smaller, yet concentrated market size is an ideal environment to test new technologies before launching at an international scale.
Fintech companies are also choosing Malta due to its strategic location next to Africa, a continent that has experienced Fintech boom and a hotbed in fintech investment and test ground for new financial technologies.
The developing fintech sector is supported by an efficient regulator, which has been pro-active in developing regulation to establish itself as jurisdiction in the sector and drive growth in foreign investment.
The protection of regulation has encouraged fintech start-ups to the jurisdiction, which are pursing innovative projects. Fintech businesses have comfort in the know that the legislation in place mitigates any harmful risk to the business and its consumers.
Malta was the first country in the world to develop a regulatory framework for virtual currencies, ICO’s and DLTs. The regulatory framework includes three bills titled; the Malta Digital Innovation Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act.
The Financial Asset Act includes virtual asset offerings, or initial coin offerings and outlines stringent requirements for businesses engaging with cryptocurrencies, in addition to service providers issuing cryptocurrencies.
The Malta Financial Services Authority (MFSA) developed a Regulatory Sandbox in 2020 to allow fintech start-ups, scale ups, technology firms and financial service providers, to test financial technology.
The Sandbox has four main objectives which are innovation, sustainability, legal certainty and knowledge. Businesses can apply to test in the Regulatory Sandbox by submitting a proposal to the MFSA. The regulator will assess the proposal and provide the applicant regulatory guidance throughout its sandbox lifecycle.
The Malta Financial Services Authority (MFSA) also established a Fintech Strategy to support businesses to act on opportunities which can drive innovation in financial products.
As a leading Corporate Service Provider in the Fintech space, we provide our clients with expert advice in structuring and guidance in the regulatory environment.
As a major global financial centre, the Cayman Islands has been long regarded as a top tier jurisdiction for banking, capital markets, investment vehicles, trusts and fiduciary services. In recent years, it has been categorised as a global hub for digital innovation and technology, its advanced infrastructure and competitive fiscal regime are stand out factors, however with the support of the jurisdictions ambitious Government, they have created a digital eco-system for business thrive.
An example is the Cayman Tech City, which is a special economic zone set up by Cayman Enterprise City. Ranked as the number 1 free zone in the Americas and 5th globally, it is a recognised sphere for innovation and its environment attracts the most cutting edge start-ups and houses some of the biggest blockchain and fintech companies in the world.
As a result, the Cayman Islands fintech sector has developed rapidly, with the ability to generate active business income offshore; digital asset-related activities that take place include crypto exchange services, fund-issuing tokens and initial coin offerings (ICO). It even housed the largest ICO in the world, which is a testament to its leading position in the sector.
It has also come apparent that business owners are seeking jurisdictions based on the quality of life they provide. As for the Cayman Islands, it has one of the highest living standards in the world; its vibrant cultural community is safe, friendly and welcoming. It’s beautiful tropical environment boasts a thriving tourist sector and excellent healthcare, education and real estate.
In 2020, the Cayman Islands introduced The Virtual Asset (Service Providers) Law (VASPs), a legislative framework for the registration and licensing of virtual asset services from a Cayman Islands entity or from within the Cayman Islands. In this case, they are recognised as Virtual Asset Service Providers (“VASPs”).
In keeping with the jurisdictions transparent reputation, the Government introduced the VASP regulation to instill compliant measures on digital assets; this mitigates any harmful risk to the jurisdiction, businesses and consumers.
As a framework utilised to regulate the use of digital assets, the VASP act is required for any virtual asset service; this can be defined as storing, issuing, transferring or exchanging virtual assets. It also applies to engaging or providing financial services related to an offer or sale of a virtual asset.
The initial process requires any entity that wishes to, or is engaged in virtual asset services to register as a VASP under the VASP Act with the Cayman Islands Monetary Authority (“CIMA”). Once this is complete, it is possible to apply for a licence under the VASP Act.
The Cayman Islands Monetary Authority (CIMA) have begun drafting a second phase of the VASP Act, which includes a consultation on the obligations for the provision of services by virtual-asset custodians and virtual-asset trading platforms. The regulation aims to provide clarity and guidance for both the CIMA and virtual-asset providers on the rules required.
The Cayman Islands aims to, with the implementation of the VASP, demonstrate the jurisdiction as an attractive place to operate, by providing a clear framework for providers and the reassure of compliance with international standards. The robust regulation and stable political, legal and economic landscape is an ideal environment for an innovative fintech business.
The jurisdiction has also covered regulation for forward technological development, which is defined as a sandbox licence. Depending on a VASPs nature of operations, The Cayman Islands Monetary Authority will assess the virtual asset service to see if it will be utilising technology, or innovation in technology that requires an additional assessment. A sandbox environment encourages businesses to the jurisdiction as it allows businesses to test their practices, which is useful analyse performance before it achieves conditional approval from regulators. This attracts many fintech start-ups to the jurisdiction.
As a requirement, VASPs in the Cayman Islands must have a registered office and have appointed MLRO, AMLCO and DMLRO officers to carry out AML procedures. As a leading Corporate Service Provider in the fintech space on the Isle of Man, we have been assisting clients with incorporating fintech structures for many years, including registered office services and an appointed MLRO.
We provide our clients close assistance from bespoke fintech consultancy, to understand their unique business model and goals to the licence application formation. Our experience with the Regulator in each of our jurisdictions provides us with the expertise on how to form a licence application of the highest standard. In addition to this, we provide guidance and work with our clients to form a comprehensive business plan.
Our relationship with the Government in each of our jurisdictions supports our assistance with Government grant applications on behalf of the client. Our global network of intermediaries, which includes established relationships with banks, lawyers and auditors supports our seamless service.
In addition to our clients receiving a dedicated point of contact, our administration team provide an efficient on-boarding process from the incorporation to the on-going administration. Our services continue to support the business as it grows and flourishes.
Our knowledge in each of our jurisdictions and established networks also provides our clients with added value. We can provide assistance with obtaining local employment and much more.
As a professional corporate body in multiple jurisdictions, we have been assisting clients in the fintech sector for many years. Our services include comprehensive support in navigating regulatory environments, licence applications and the ongoing fiduciary services thereafter. Our bespoke approach involves assistance with specific fintech activities such as, ICO consulting and advisory, white paper drafting and the development of tokens and smart contracts.
If you would like to know more on our Fintech services or have an enquiry, please visit our contact page here, or alternatively email us at info@affinityco.com
A prestigious jurisdiction which is regarded globally for digital innovation is the Isle of Man. At the forefront of the industry, the jurisdiction holds a developed fintech sector which is a diverse landscape of businesses utilising virtual assets, such as virtual asset payment service providers, virtual asset exchanges and blockchain startups.
An established financial centre with a competitive fiscal regime, the jurisdiction offers world-class infrastructure that supports technology based innovation.
The forward-thinking Government is a driving force behind the jurisdictions fintech sector, in which they have created a blockchain office and sandbox testing environment, which has attracted many innovative start-ups in the space.
The Islands advanced telecommunications infrastructure has been used as a test bed for emerging technologies and new businesses establishing on the Island can apply to the Isle of Man Government for financial assistance in the form of grants or loans.
They push for new exploration and creativity in financial innovation by running fintech initiatives, an example is The 2022 Fintech Innovation Challenge. In collaboration with Digital Isle of Man, Finance Isle of Man and the Isle of Man Financial Services Authority, applicants will share a business proposition which is an innovative solution, with one winning the opportunity to bring their business idea to the market.
The Government provides information on the licence application, legislative and regulatory framework. They also encourage new business in the space by offering various funding options.
The jurisdictions regulator, The Isle of Man Gambling Supervision Commission, became the first jurisdiction in the world to issue a Blockchain gambling business with a gambling licence and the first jurisdiction to regulate token based software suppliers.
We were fortunate enough to assist with this case, which is a testament to our leading position in the sector and established relationship with the regulator.
Such developments validate the Isle of Man’s leading position in the fintech sector.
Globally regarded for robust regulation, the Isle of Man was one of the first jurisdictions in the world to bring in regulation on any businesses carrying out activity on virtual assets. In 2015, they introduced the registration regime titled, the Designated Business Act.
A testament to the jurisdictions credibility and excellent standards, the purpose of the regulation was to ensure compliant AML/CFT measures on the use of virtual assets to maintain the jurisdictions transparent reputation.
The Isle of Man Financial Services Authority has defined convertible virtual currency activity as; issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including cryptocurrencies, virtual assets or similar concepts where the concept is accepted by persons as a means of payment of goods or services, a unit of account, a store of value or a commodity.
In order to set up a fintech business on the Isle of Man, it must register under the Designated Businesses Act (2015) which applies to all businesses and professions carrying out activities that fall under the definition of a “designated business” to register with the Isle of Man Financial Services Authority (FSA). Within the category of designated business activities includes ‘Convertible Virtual Currencies’.
To do this, a business must register a business representative person on the DNFBP Portal and provide the following information; the business details, including the activities and business structure, a risk assessment form including the procedures, business profile and client base, and a specified person questionnaire including details of the specified persons associated with the business. A full user guide on this can be found on the FSA website. Once this is complete, the Authority will decide if the business falls within the “designated business” requirements to be registered under the Act.
An initial registration fee is required and the business will thereafter be required to pay annual fees if the business is overseen by the Authority. Or the designated business is overseen by a professional body, which will require annual fees for their services.
As a leading Corporate Service Provider in the fintech sector on the Isle of Man, we have assisted many clients with bespoke structuring in establishing fintech entities, and have worked on numerous innovative cases across specific areas of the fintech industry, including blockchain, cryptocurrency licensing and ICOs.
We provide our clients a personal service, which involves close support and guidance through applying for the Designated Business Act and every stage thereafter.
Malta is quickly becoming a jurisdiction of choice when deciding where to set up a Fintech entity. A recognised hub for business and one of the fastest-growing finance centres, its developed infrastructure and pool of experienced professionals, are well-equipped to support innovation in technology.
Malta is a regarded as a leading crypto-friendly jurisdiction globally, which is due to the pro-active approach in implementing legislation in issuing cryptocurrencies.
The jurisdiction offers businesses a competitive fiscal regime, a variety of flexible structures and robust regulation. Its smaller, yet concentrated market size is an ideal environment to test new technologies before launching at an international scale.
Fintech companies are also choosing Malta due to its strategic location next to Africa, a continent that has experienced Fintech boom and a hotbed in fintech investment and test ground for new financial technologies.
The developing fintech sector is supported by an efficient regulator, which has been pro-active in developing regulation to establish itself as jurisdiction in the sector and drive growth in foreign investment.
The protection of regulation has encouraged fintech start-ups to the jurisdiction, which are pursing innovative projects. Fintech businesses have comfort in the know that the legislation in place mitigates any harmful risk to the business and its consumers.
Malta was the first country in the world to develop a regulatory framework for virtual currencies, ICO’s and DLTs. The regulatory framework includes three bills titled; the Malta Digital Innovation Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act.
The Financial Asset Act includes virtual asset offerings, or initial coin offerings and outlines stringent requirements for businesses engaging with cryptocurrencies, in addition to service providers issuing cryptocurrencies.
The Malta Financial Services Authority (MFSA) developed a Regulatory Sandbox in 2020 to allow fintech start-ups, scale ups, technology firms and financial service providers, to test financial technology.
The Sandbox has four main objectives which are innovation, sustainability, legal certainty and knowledge. Businesses can apply to test in the Regulatory Sandbox by submitting a proposal to the MFSA. The regulator will assess the proposal and provide the applicant regulatory guidance throughout its sandbox lifecycle.
The Malta Financial Services Authority (MFSA) also established a Fintech Strategy to support businesses to act on opportunities which can drive innovation in financial products.
As a leading Corporate Service Provider in the Fintech space, we provide our clients with expert advice in structuring and guidance in the regulatory environment.
As a major global financial centre, the Cayman Islands has been long regarded as a top tier jurisdiction for banking, capital markets, investment vehicles, trusts and fiduciary services. In recent years, it has been categorised as a global hub for digital innovation and technology, its advanced infrastructure and competitive fiscal regime are stand out factors, however with the support of the jurisdictions ambitious Government, they have created a digital eco-system for business thrive.
An example is the Cayman Tech City, which is a special economic zone set up by Cayman Enterprise City. Ranked as the number 1 free zone in the Americas and 5th globally, it is a recognised sphere for innovation and its environment attracts the most cutting edge start-ups and houses some of the biggest blockchain and fintech companies in the world.
As a result, the Cayman Islands fintech sector has developed rapidly, with the ability to generate active business income offshore; digital asset-related activities that take place include crypto exchange services, fund-issuing tokens and initial coin offerings (ICO). It even housed the largest ICO in the world, which is a testament to its leading position in the sector.
It has also come apparent that business owners are seeking jurisdictions based on the quality of life they provide. As for the Cayman Islands, it has one of the highest living standards in the world; its vibrant cultural community is safe, friendly and welcoming. It’s beautiful tropical environment boasts a thriving tourist sector and excellent healthcare, education and real estate.
In 2020, the Cayman Islands introduced The Virtual Asset (Service Providers) Law (VASPs), a legislative framework for the registration and licensing of virtual asset services from a Cayman Islands entity or from within the Cayman Islands. In this case, they are recognised as Virtual Asset Service Providers (“VASPs”).
In keeping with the jurisdictions transparent reputation, the Government introduced the VASP regulation to instill compliant measures on digital assets; this mitigates any harmful risk to the jurisdiction, businesses and consumers.
As a framework utilised to regulate the use of digital assets, the VASP act is required for any virtual asset service; this can be defined as storing, issuing, transferring or exchanging virtual assets. It also applies to engaging or providing financial services related to an offer or sale of a virtual asset.
The initial process requires any entity that wishes to, or is engaged in virtual asset services to register as a VASP under the VASP Act with the Cayman Islands Monetary Authority (“CIMA”). Once this is complete, it is possible to apply for a licence under the VASP Act.
The Cayman Islands Monetary Authority (CIMA) have begun drafting a second phase of the VASP Act, which includes a consultation on the obligations for the provision of services by virtual-asset custodians and virtual-asset trading platforms. The regulation aims to provide clarity and guidance for both the CIMA and virtual-asset providers on the rules required.
The Cayman Islands aims to, with the implementation of the VASP, demonstrate the jurisdiction as an attractive place to operate, by providing a clear framework for providers and the reassure of compliance with international standards. The robust regulation and stable political, legal and economic landscape is an ideal environment for an innovative fintech business.
The jurisdiction has also covered regulation for forward technological development, which is defined as a sandbox licence. Depending on a VASPs nature of operations, The Cayman Islands Monetary Authority will assess the virtual asset service to see if it will be utilising technology, or innovation in technology that requires an additional assessment. A sandbox environment encourages businesses to the jurisdiction as it allows businesses to test their practices, which is useful analyse performance before it achieves conditional approval from regulators. This attracts many fintech start-ups to the jurisdiction.
As a requirement, VASPs in the Cayman Islands must have a registered office and have appointed MLRO, AMLCO and DMLRO officers to carry out AML procedures. As a leading Corporate Service Provider in the fintech space on the Isle of Man, we have been assisting clients with incorporating fintech structures for many years, including registered office services and an appointed MLRO.
We provide our clients close assistance from bespoke fintech consultancy, to understand their unique business model and goals to the licence application formation. Our experience with the Regulator in each of our jurisdictions provides us with the expertise on how to form a licence application of the highest standard. In addition to this, we provide guidance and work with our clients to form a comprehensive business plan.
Our relationship with the Government in each of our jurisdictions supports our assistance with Government grant applications on behalf of the client. Our global network of intermediaries, which includes established relationships with banks, lawyers and auditors supports our seamless service.
In addition to our clients receiving a dedicated point of contact, our administration team provide an efficient on-boarding process from the incorporation to the on-going administration. Our services continue to support the business as it grows and flourishes.
Our knowledge in each of our jurisdictions and established networks also provides our clients with added value. We can provide assistance with obtaining local employment and much more.
As a professional corporate body in multiple jurisdictions, we have been assisting clients in the fintech sector for many years. Our services include comprehensive support in navigating regulatory environments, licence applications and the ongoing fiduciary services thereafter. Our bespoke approach involves assistance with specific fintech activities such as, ICO consulting and advisory, white paper drafting and the development of tokens and smart contracts.
If you would like to know more on our Fintech services or have an enquiry, please visit our contact page here, or alternatively email us at info@affinityco.com
In this article, we explore the rapidly developing fintech sector in Malta and outline the robust legislation in place on virtual assets. The Environment Malta is regarded as a jurisdiction of choice when deciding where in the world to set up a Fintech entity. A recognised hub for business, holding one of the fastest-growing finance…
As leading offshore financial centers of excellence and recognised digital hubs, it is no wonder the Isle of Man and the Cayman Islands boast attractive fintech sectors. They have worked hard to develop their prestigious reputations in transparent finance over the years and have done this by developing top-tier regulation. In the emerging digital asset…
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No information provided by Affinity should be construed as specific VAT or taxation advice. All information provided is, to the best of our knowledge, correct when published.
Affinity are a regulated Corporate/Fiduciary providers, we are not professional tax advisors.
Any information provided is based on our Company’s many years of experience in the industry and practical knowledge of workable solutions. We propose tried and tested solutions which we have utilised and are happy to propose to potential clients. We always recommend that clients obtain independent advice prior to committing to a structure.
