Regulatory Update March 2019

The IOM introduced the DBA in 2015, under which an IOM Company can register as a ‘Designated Business’, meaning anyone who undertakes:

“the business of issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including crypto-currencies or similar concepts where the concept is accepted by persons as a means of payment for goods or services, a unit of account, a store of value or a commodity”

An ICO falls within this definition, meaning a company can register as a Designated Business with the FSA and conduct legitimate ICO in a safe, supportive, zero tax jurisdiction with a clean international reputation.

DBA registration eliminates burdens of a license and solely requires the business to comply with AML/CFT standards. The time to register is at the FSA’s discretion, but we are regularly experiencing a 3-week turnaround. Please note; prior to registration the applicant is required to complete the business’ AML/CFT Manual and associated registers which are reviewed and signed-off by all directors.

In November 2018, the FSA published an updated registration policy in response to growing concern over lack of control vetting businesses registering under the DBA to conduct ICOs and knowledge of the many frivolous ICOs being conducted globally.

It is the IOM FSA’s policy to refuse to register an applicant which engages in the CVC business of issuing a CVC (of whatever type) where the CVC issued provides no benefit to the purchaser other than the CVC itself. Examples of this include, but are not restricted to: 1. ICOs which convey — 2. limited or no rights to the income generated from a project; 3. limited or no rights to use the assets developed, purchased or acquired from the funds raised by the ICO; 4. ICOs where there is no reasonable basis for any expected capital growth of the value of the CVC.