How to Sell Tokens Without a License in 2023

Token sales, also known as Initial Coin Offerings (ICOs), have become a popular way for startups and established enterprises to raise funds. However, selling tokens can be a difficult process, especially when it comes to complying with local laws. Token sales may require a license from the relevant regulatory authorities in certain scenarios; however, there are ways to sell tokens with no license required. We will also introduce FirmEU, a well-known company that specializes in assisting businesses in selling tokens with no license and with little to no tax payment.

What is a Token

A token is a digital asset that represents something of value or usefulness. Think of it like a digital coupon or token you might use to get a discount at a store. Only in this case, it is completely digital and exists on a blockchain network.

A crypto token is a digital asset that is issued on a blockchain network like Ethereum or Binance Smart Chain. Tokens are generated through a process known as tokenization, which involves building a smart contract on a blockchain that defines the token’s rules and operation.

Tokens can represent a variety of goods or services, including real estate, commodities, and even other cryptocurrencies. They are intended to add a specific value or function to a blockchain ecosystem.

A blockchain is a form of digital ledger that securely and transparently records transactions. On a blockchain network, such as Ethereum or Binance Smart Chain, tokens can be created and managed.

Tokens, unlike cryptocurrencies such as Bitcoin or Litecoin, which are intended primarily as a medium of exchange, have additional functionality in addition to operating as digital money. Tokens can be used to pay for goods and services, as well as get access to certain products or services on a blockchain network.

Types of Tokens

Crypto tokens are divided into numerous sorts, each with its own set of features and capabilities. Understanding the various types of crypto tokens can assist investors and users in selecting the best token for their purposes. 

• Utility Tokens: Provide access to a specific product or service on a blockchain network.
• Security Tokens: Represent ownership in a company or asset, and are subject to securities laws.

• Payment Tokens: Used as a digital currency for transactions on the blockchain network.

• Governance Tokens: Provide holders with voting rights on the network.

• Non-Fungible Tokens (NFTs): Unique digital assets that represent one-of-a-kind assets.

• Stablecoins: Designed to maintain a stable value, often pegged to a fiat currency.

Tokens can also be classified based on their fungibility. Fungible tokens are interchangeable with one another, meaning that one token is equivalent to another. Non-fungible tokens (NFTs), on the other hand, are unique and cannot be exchanged for another token.

Understanding Token Sales

Token sales are also known as Initial Coin Offerings (ICOs) or Initial Exchange Offerings (IEOs). As mentioned in the introduction of this blog, token selling has grown increasingly popular as a form of generating funds for blockchain-based projects, as well as for usage in digital transactions and value exchanges.

Token sales are fundraising events where new blockchain-based projects raise capital by issuing tokens that investors can buy with cryptocurrencies, fiat currencies, or other tokens. These tokens may have different functions depending on the project, such as being used as currency on a platform, granting access to services, or representing ownership in an asset.

The primary purpose of a token sale is to raise funds for a new blockchain-based project. These funds serve to finance the project’s development and launch, as well as to support ongoing operations and growth. Token sales can also be used to generate interest in a project and to build a community of early adopters and supporters.

Structure of a Token Sale

Token sales can be structured in a variety of ways, based on the project’s aims and needs. Here are a couple of such examples:

• Fixed Price Sale: Tokens are sold at a fixed price in this form of token sale, and investors can buy as many tokens as they wish at that price. This is the most frequent sort of token sale and is reasonably easy to carry out.

• Dutch Auction: In a Dutch auction, the price of tokens begins high and gradually declines until all tokens are sold or the auction finishes. This form of token sale can be useful in terms of creating excitement and urgency among investors, but it requires careful planning and administration. This is why you need a company like firmEU to help you through the process.

• Reverse Dutch Auction: In a reverse Dutch auction, the price of tokens starts low and increases over time until all tokens are sold or the auction ends. This type of sale can be useful for ensuring that all tokens are sold, but it can also lead to investors waiting until the last minute to buy.

• Variable Price Sale: In a variable price sale, the price of tokens fluctuates based on market demand. This type of token sale is more complex than the others, and it requires a sophisticated pricing algorithm and a well-designed token model.

Challenges of Selling Tokens

Many jurisdictions demand businesses obtain a license before they can sell tokens. These licenses can be difficult to get and require huge documentation, legal compliance, and regulatory scrutiny. Some of the difficulties of selling tokens in jurisdictions that require licenses include:

• High Fees: Obtaining a license to sell tokens can be a costly procedure that necessitates significant resources and legal expertise.

• Regulatory Compliance: To get and keep a license, businesses must follow a number of laws, including anti-money laundering (AML) and know-your-customer (KYC) regulations.

• Legal Difficulties:  The legal requirements for selling tokens can be complicated, and businesses may need to seek legal counsel to verify that they are in compliance with all applicable rules.

• Time-consuming:  Obtaining a license can be a time-consuming process that can cause a company’s capacity to sell tokens to be delayed.

Sell Token Without a License

We’ve seen the challenges that people often face when it comes to selling tokens in jurisdictions that require licenses. Now,  the major solution to these token sale challenges is to establish a presence in an unregulated jurisdiction. 

What is Establishing a Presence in an Unregulated Jurisdiction?

Establishing an entity in an unregulated jurisdiction involves setting up a corporation remotely in a jurisdiction where token sales are not under strict control. You can sell your tokens through this company without getting a license. The strategy is frequently utilized by businesses that seek to reap the benefits of token sales without paying the costs and regulatory obligations connected with approved jurisdictions.

Why Establish a Presence in an Unregulated Jurisdiction?

There are several benefits associated with establishing a presence in an unregulated jurisdiction in relation to token sales:

• Flexibility: Businesses can select the country that best meets their needs, whether it’s a low-tax jurisdiction or one with a favorable legal and regulatory environment.

• Cost Savings: Businesses can operate more efficiently and cost-effectively by avoiding the regulatory procedures and expenditures associated with licensed areas.

• Access to Global Markets: By establishing a corporation in an unregulated country, firms can gain access to global markets that would otherwise be difficult to reach.

How to Establish a Presence in an Unregulated Jurisdiction

Establishing a presence in an unregulated jurisdiction involves several steps:

• Choose the Right Jurisdiction: When deciding where to establish a business, businesses should evaluate the legal and regulatory environment, tax rates(some countries offer less tax-rate), and other aspects. 

• Incorporate the Company: After deciding on a jurisdiction, consult with incorporation and legal specialists to incorporate the company in accordance with local rules and regulations. Depending on the jurisdiction, this process may differ and may necessitate additional documents.

• Obtain Continous Legal Counsel: Now that the company is set up, It is critical to seek continuous legal counsel from experts such as FirmEU to ensure that the entity is properly structured and operating in accordance with local laws and regulations. 

Benefits of Working with FirmEU

FirmEU is an organization of competent experts and consultants who specialize in providing legal and regulatory guidance to companies interested in selling tokens in unregulated regions. We have a workforce of professionals who can help businesses establish a corporation in a jurisdiction where token sales are not regulated. Here are some benefits of choosing us: 

• Experienced Lawyers and Consultants: FirmEU has a team of expert lawyers and advisors who are well-versed in the legal and regulatory requirements of selling tokens in various jurisdictions. Our team can provide thorough assistance to firms on how to organize token sales and manage the legal and regulatory landscape in various jurisdictions. This ensures that businesses can sell their tokens lawfully and compliantly, without encountering any legal or regulatory stumbling blocks.

• Incorporation Assistance: One of the most important services provided by FirmEU is incorporation assistance. We can assist businesses in establishing an entity in an unregulated jurisdiction, remotely. Meaning that you can set up a company in a country without you being there physically. We provide guidance on business governance, taxation, and other regulatory matters. Also, FirmEU provides continuing help once the entity has been established to guarantee that the business remains compliant with all legal and regulatory obligations.

• Reduce Risks: Working with FirmEU allows firms to reduce the legal and regulatory risks involved with forming an entity in an unregulated jurisdiction. We have an in-depth understanding of the legal and regulatory landscapes in many jurisdictions and can provide businesses with the information they require to guarantee that their token sales are legal and compliant. This will help you to avoid costly legal and regulatory penalties while also ensuring the seamless operation of their operations.

Conclusion

While token sales or Initial Coin Offerings (ICOs) have become a popular way for businesses to raise funds, complying with local laws and regulations can be challenging. Selling tokens often requires a license from regulatory authorities, which can be costly, time-consuming, and require huge legal expertise. However, there is a major way to sell tokens without a license. This is finding jurisdictions where token sales are not regulated. Firms like FirmEU specialize in assisting businesses to sell tokens without a license and with minimal tax payments. Contact us via the form below.

FAQ

Here is a frequently asked question that you may find useful as a European.

What is the solution for selling a token in the EU due to MEC law?

If you’re looking to sell a token in the European Union (EU), you may need to comply with the Markets in Crypto-Assets (MiCA) regulation. MiCA, also known as the MEC law, was proposed by the European Commission to regulate crypto-assets and protect consumers. The regulation requires any company that sells or trades crypto-assets in the EU to obtain a license from a national regulatory authority.

However, if you do not wish to go through the process of obtaining a license in the EU, there is an alternative solution – opening a company remotely in a country that does not require a license to sell tokens. This can be a cost-effective and time-efficient way to sell tokens to customers in the EU without running afoul of MiCA.

FirmEU is a specialized company that can help you with this process. We have experience in setting up companies remotely and can guide you through the process of opening a company in a country that is friendly to token sales. This will allow you to sell your tokens in the EU without the need for a license.