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Initial Coin Offering in Norway

Initial Coin Offering in Norway

There are many industries that can be explored in Norway, apart from the traditional ones. Among them, IT and digital technologies have become quite popular among the new generation of entrepreneurs. Now, it is possible to launch Initial Coin Offerings or ICOs in Norway, thanks to several projects involving the Central Bank.

If you want to invest by opening an Initial Coin Offering in Norway, our local specialists can help you. We are at your disposal with company formation services in Norway in its most prolific industries.

Steps to create an ICO in Norway

In order to start an Initial Coin Offering in Norway, the following steps need to be considered:

  1. creating a white paper outlining the objectives of the initial coin offering;
  2. registering a company with the Trade Register (the limited liability company is usually employed);
  3. creating a digital token or use a popular crypto coin;
  4. creating a platform for promoting/trading/or any other activity related to the ICO.

By comparison with the creation of another type of business, an ICO implies first creating a white paper or business plan through which the objective and operations of the company are explained.

The issuer must draft a white paper in which the following aspects must be clarified:

  • – details regarding the project and the platform’s terms of service;
  • – the terms on which the virtual token is traded commercially;
  • – details regarding the issuer;
  • – details regarding the other partners engaged in the project;
  • – the project’s stage and major objective.

According to the ICO’s commercial terms, the investor can exchange project participations, shares, or other debentures for the virtual currency. To make transactions simpler, both issuers and investors usually use electronic wallets.

Our local consultants can advise on the procedures associated with launching a cryptocurrency company under the form a Norwegian ICO.

What is Norway’s approach on virtual money?

During the pandemic, many Norwegian citizens have sought alternative investment assets, which led to many of them choosing to buy cryptocurrencies. The Norwegian government had already set the scene for the fintech sector in 2018 when it signed the European Blockchain Partnership in order to digitize its services to the population.

With only 3 to 4% of the population still using cash in most of the transactions, setting up businesses that rely on cryptocurrencies is a good idea, and a Norwegian ICO is a successful one.

As a definition, an ICO is an initial public offering (IPO) that relies on blockchain technology instead of the traditional trading platforms.

In order to create an ICO in Norway, one must first register a company with the Trade Register. Our company registration advisors in Norway can help you with the entire procedure.

Legislation covering cryptocurrencies in Norway

Virtual currencies are not regarded as a legal tender in Norway as they do not comply with the conventional definition of money or currency. Furthermore, Norway does not have any special regulations governing virtual currencies in the areas of banking, money transfer, securities and investment, or the regulation of exchanges, mining, and issuance of digital coins. As a result, under the applicable financial services legislation, companies or individuals running or conducting virtual currency activities are not needed to hold a license.

In 2018, Norway put into effect a new Anti-Money Laundering Act and an associated regulation that broadened the law’s application to include custodian wallet providers and companies that offer exchange services between virtual currencies and fiat currencies.

This way, those who want to create ICOs in Norway can rely on the wide applicability of the Anti-Money Laundering Law. With respect to the procedure of registering a business in this sense, there are no special requirements to comply with other than the Company Law.

Our company registration advisors in Norway can handle the incorporation procedure on behalf of investors.

Special regulations applicable to ICOs in Norway

In order to create an Initial Coin Offering in Norway, after the registering the company, it is necessary to draft a prospectus, in accordance with EU regulations, even if it is not a member of the European Union. However, there are numerous EU companies and private citizens operating, respectively living in Norway, hence the integration of certain rules in the national legislation. Moreover, starting with 2019, Norway had issued its own Securities Trading Law which covers cryptocurrencies as financial instruments.

Here are the main aspects when seeking to launch an ICO in Norway:

  • – apart from drafting a prospectus, the trading platform must also respect the 2018 Anti-Money Laundering Regulations;
  • – a new “fit and proper” test was introduced to those providing virtual exchange currency services in 2019, and it must be respected by those creating ICOs;
  • – at the moment, there is no need to obtain a license to trade cryptocurrencies, such is the case of IPOs;
  • – from a taxation point of view, virtual currencies are treated as assets, therefore, taxed accordingly.

The main authorities providing for the regulations and legislation applicable to virtual currencies treated as financial instruments are the Norwegian Central Bank and the Financial Supervisory Authority.

Feel free to address our consultants if you want to open a company in Norway and want to use it to launch an Initial Coin Offering.

Licensing requirements for ICOs in Norway

There are no particular regulations governing securities and investments, mining, or issuing at the time, and there are no specific license requirements for virtual currency exchanges. At the moment, Norway does not impose any requirement on crypto exchanges to apply for specific licenses. However, it is anticipated that Norwegian authorities will work with nations taking part in the European Blockchain Partnership.

A declaration on the creation of a European blockchain partnership has been signed by all EU members and EAA members, including Norway and Liechtenstein, in order to share knowledge and expertise in technical and regulatory areas. The partnership will help all countries to get ready for the introduction of blockchain applications across the EU’s digital single market.

It is anticipated that the Norwegian authorities would work with the other participating nations in the future to regulate virtual currencies based on this collaboration and the current partnership under the EEA Agreement.

Taxation of virtual currencies in Norway

As mentioned above, cryptocurrencies are treated as assets and will be taxed as it follows:

  1. private individuals must pay the capital gains tax that is levied at the rate of 22%;
  2. individuals may also pay the wealth tax when holding assets in the form of cryptocurrencies – the current rate of this levy is 0.85%;
  3. companies must pay the corporate tax of 22% if their virtual currency-related operations are considered business activities;
  4. the remote sale of virtual currencies is imposed the 0% VAT rate, while other activities are exempt from the VAT, just like other financial services;

If you are interested in creating an Initial Coin Offering in Norway and need assistance, feel free to address our company formation specialists