Setting Up a Crypto Business

A cryptocurrency is a digital currency which is created and managed through the use of advanced encryption techniques known as cryptography. Cryptocurrency took the plunge from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009.

The Future of Cryptocurrency

Economic analysts forecast a huge change in crypto is approaching as institutional money enters the market. Furthermore, there is the possibility that crypto will be floated on the Nasdaq, which would add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that crypto requirements are a verified exchange traded fund (ETF). An ETF would definitely make it easier for people to invest in Bitcoin, but still needs to create the demand for  Crypto Investment, which may not by default be generated with a fund.

Benefits of Cryptocurrency

  1. Transactions

In traditional business dealings, third party (ie brokers, agents, and legal representatives) intervention can add significant complication and expense to what should otherwise be a straightforward transaction. There will be paperwork, brokerage fees, commissions, and any number of other special conditions which may apply.

One of the advantages of Cryptocurrency Transactions is that it is a direct and straight-forward affair, taking place on a peer-to-peer networking structure which makes “cutting out the middleman” a standard practice. This paves way for greater clarity in establishing audit trails, less confusion over who should pay what to whom, and greater accountability, in that the two parties involved in a transaction each know who they are.

  1. Asset Transfers

The cryptocurrency blockchain was described by a financial analyst as resembling a “large property rights database”, which can on one level be used to execute and enforce two-party contracts on commodities such as automobiles or real estate. However, the blockchain cryptocurrency ecosystem can also be used to facilitate dedicated modes of transfer.

For instance, cryptocurrency contracts can be designed to add third party approvals, make reference to external facts, or be finished at a particular date or time in the future. And as the cryptocurrency holder have exclusive governance of the account, this reduces the time and expense involved in making asset transfers.

  1. More Confidential Transactions

One of the greatest benefits of cryptocurrency is that each transaction you make is a unique exchange between two parties, the terms of which may be negotiated and agreed in each case. What’s more, the exchange of information is done on a “push” basis, whereby you can transmit exactly what you wish to send to the recipient – and nothing else besides that.

This safeguards the privacy of the financial history and provides protection from the threat of account or identity theft which is higher under the traditional system, where the information can be exposed at any point in the transaction chain.

  1. Transaction Fees

Transaction fees can take a significant bite out of your assets – especially if you are doing a lot of transactions in a month.

As the data miners (remote and separate computer systems) that do the number crunching which generates Bitcoin and other cryptocurrencies attain their compensation from the cryptocurrency network involved, transaction fees generally do not apply.

There can be some external fees involved if you engage the services of a third-party management service to maintain your cryptocurrency wallet, but another one of the benefits of cryptocurrency is that they are still likely to be much less than the transaction charges incurred by traditional financial systems.

  1. Greater Access to Credit

Digital data transfer and the internet are the media facilitating the exchange in cryptocurrencies. So, these services are potentially accessible to anyone who has a viable data connection, some knowledge of the cryptocurrency networks on offer, and ready access to their relevant websites and portals.

It is estimated that there are currently 2.2 billion individuals across the world who have access to the internet or mobile phones, but presently do not have access to traditional systems of banking or exchange. The cryptocurrency ecosystem holds the prospect to make asset transfer and transaction processing available to this huge market of willing consumers – once the needed infrastructure (digital and regulatory) is put in place.

  1. Simpler International Trade

Though largely unrecognised as legal tender on national levels at present, cryptocurrencies by their very nature are not subject to the exchange rates, interest rates, transactions charges, or other levies imposed by a particular country.

And using the peer-to-peer mechanism of the blockchain technology, cross-border transfers and transactions can be performed without complications over currency exchange fluctuations, and the like.

  1. Individual Ownership

In a traditional banking or credit card system, you effectively turn stewardship of your funds over to a third party which can exercise the power of life or death over your assets. Accounts can be closed without notice for infringements of a financial institution’s Terms of Service – needing you as the account holder to jump through hoops in order to get yourself back into the system.

Possibly the greatest of all benefits of cryptocurrency is that unless you have delegated management of your wallet over to a third-party service, you are the sole owner of the corresponding private and public encryption keys that make up your cryptocurrency network identity or address.

Labuan Cryptocurrency Exchange Licence

Cryptocurrency exchange may be conditionally divided into two categories –

  • Conventional cryptocurrency exchange : which allows to exchange crypto currencies exclusively between one and another.
  • Fiat cryptocurrency exchange : which allows to exchange fiat (traditional) currencies to cryptocurrencies, and vice versa.

Additionally, licenses that allow to perform such operations may be classified into two groups:

  • Specialised crypto-licenses implemented by authorised bodies specially to regulate operations regarding exchange of cryptocurrencies (for example, in Japan and Estonia).
  • Traditional licenses, which regulate executing financial operations, and operations with cryptocurrency, are indirectly subject to them (for example, in USA and Hong Kong).

Should you plan to operate a business related to crypto, find out how to obtain a Legit Financial Service License in order to operate your business legally with the most efficient tax structure to maximise your profits. Find out which type of Labuan license will be most suitable by contacting our QX Trust consultants at +60 3 9212 6940 or for a free consultation.