Top-5 Countries to Setup Fintech & Blockchain Startups

Top-5 Countries to Setup Fintech & Blockchain Startups

by August 16, 2018

While the coherent regulation of blockchain and fintech industry is yet to be developed, fintech startups find themselves navigating through regulatory jungles of various dos and don’ts when formulating their business models.

Recent actions and statements of most state regulators showed that many tokens currently in circulation are likely to be considered investment instruments regulated by securities laws, and even non-security tokens may fall under the regulation, such as payment services or insurance, as well as KYC/AML requirements and customer protection laws.

Thus, fluency in financial regulation becomes an important success factor for fintech projects in crypto industry. Teams of a blockchain fintech startups should aim to assess their project from financial and securities regulatory perspective from start. Eventually, the feasibility of launching a fintech startup in a country would be a comparison of all costs involved in setting up and conducting a licensed business and opening bank accounts to the benefits of market reach and business growth.

Here are our top-5 countries which cutting-edge fintech blockchain startups will find most attractive:
(keeping in mind, that the blockchain industry evolves literally every month):


singaporeSingapore is widely viewed as fintech hub that strategically aims at becoming Smart Financial Centre and the first Smart Nation. The Singapore Fintech Festival is the world’s largest one. Singapore is the 3rd largest ICO market in the world. Some of the biggest exchanges are present in Singapore, such as US-based Coinbase, GDAX and Gemini. Though there are not so much Singapore-based crypto exchanges.

While banks are still cautious towards the crypto space, blockchain fintech startups at least has the credibility of the jurisdiction itself. Singapore is a top-tier country, being accepted by banking and financial organizations around the globe, similar to Switzerland, the UK, Germany and the US. However, there are no national banks working both with crypto and fiat currencies at the moment in Singapore.

Singapore is the early advocate of blockchain technology and crypto. Singapore’s strategical position is to let the crypto market grow with minimal intervention, provided that crypto market does not qualify as regulated market and, hence, fall under existing financial markets and securities regulations. If the latter is the case, the company may be subject to full blown regulatory regime set forth by MAS (as for any other Fintech business). It would nevertheless be slightly cheaper to step up a fully compliant business in Singapore compared to Europe.

The Monetary Authority of Singapore (MAS) supports the development of fintech ecosystem by various initiatives such as: Fintech and Innovation Group (responsible for formulating regulatory policies), Financial Sector Technology and Innovation Scheme, fintech innovation lab Looking Glass. Singapore has recently experienced an influx of funds, family offices, institutional-grade funds and financial vehicles, licensed to operate with crypto. This goes well with the backbone of Singapore financial industry (banking, asset management, forex, corporate finance).

The following are primary regulatory aspects to think about when launching fintech / crypto business in or from Singapore:

There is an extensive and well-thought licensing structure for financial markets, such as broker-dealer, custodian, financial services etc under MAS;

  • There is no specific regulation or guidelines in relation to use of distributed ledger technology (DLT) in Singapore.
  • MAS does not regulate virtual currencies per se. However, MAS issued a consultation paper proposing the Payment Services Bill in November 2017, which is expected to govern virtual currencies under a separate license;
  • MAS issued a statement confirming that offer or issue of security tokens will be regulated by securities law as well. For example, MAS is proposing to expand the current regulated market operator license (RMO) from a single tier to three separate tiers that would better match regulatory requirements to the risks posed by different types of financial companies, including crypto startups.
  • At present operations in crypto space, such as an exchange of one crypto currency for another, are not regulated and, thus, do not fall under existing AML regulations. However, in order to enter fiat space, fintech startup will need to collaborate with money transmission service providers, e-money institutions or banks.
  • Finally, starting November 2016, MAS provides a regulatory sandbox, where financial businesses may enjoy, if they qualify, sandbox regime such as relaxation of specific legal and regulatory requirements under control of the MAS.

Overall, an advanced regulation, market well-shaped for disruptive investment services, a vibrant community, and the country itself being a launchpad into Southeast Asia marks Singapore as a very important destination for a blockchain startup in fintech.



Gibraltar is well-known in crypto community by its trendy name – “the Crypto Harbour”. It is quite farther ahead of other crypto-friendly countries. Gibraltar’s Government is an early advocate of crypto.

In January 2016, it published for consultation a document titled, “Virtual Currency: Outline Regulatory Framework” for the consideration of regulating DLT-focused businesses. In May 2017, the consultation paper titled “Proposals for a DLT Regulatory Framework” was released. In January 2018, Gibraltar introduced the world’s first bespoke license for the companies providing DLT services Regulations 2017, reg 1(2). In February 2018, the Government of Gibraltar started drafting legislation to regulate ICOs.

As a result, Gibraltar has already attracted a lot of cryptocurrency exchanges, among them BTCC, CEX and eToro. This spring the Gibraltar Blockchain Exchange (GBX) successfully completed its Rock Token sale. There are multiple applications for a DLT license at Gibraltar as of the moment, and more than 200 applications for an ICO to hold at GBX.

Gibraltar also has a strong banking sector and a solid financial reputation globally. Plus, some of its banks also allow crypto operators to set up accounts. For example, Turicum Private Bank which is a privately-owned Gibraltar based Bank and wealth management company with Swiss routes is currently working both with crypto and fiat currencies.

Gibraltar is a home to gambling, insurance and fintech companies, a mix that promises to be a highly sophisticated and adventurous community (and game theory rocks).

The following are primary regulatory aspects to think about when launching fintech / crypto business in or from Gibraltar:

  • Gibraltar is the UK overseas territory. It joined the European Union (EU) in 1973 and is subject to EU regulations. Legal system is based on common law and the rules of equity (as the UK). We should mention though, that the Brexit uncertainty may change this situation drastically by March 2019 due to a number of complicating factors, thus EU passporting for Gibraltar entities may not be available.
  • The DLT Framework applies to persons which use DLT to store or transmit the value belonging to others only, such as a BTC/FIAT exchange. The DLT Framework will not apply to activities otherwise regulated If the activity falls under one or more regulatory frameworks outside of the DLT Framework. Also note, that EU passporting is not available for the company having DLT provider license in Gibraltar.
  • Gibraltar is currently in the process of introducing draft legislation to regulate ICOs. It is expected that a further regulatory framework will be provided to address activities of authorised sponsors of public token offerings, secondary token market operators, token investment and ancillary service providers being taken in or from Gibraltar.
  • The public offering of tokens that constitute securities are already adequately caught by existing securities legislation. Secondary token market operators, as well as regulation of ancillary financial services would be a subject to GFSC authority, modelled on the provisions of MiFID II and MiFIR.

In Gibraltar, one may enjoy crypto-specific regulation within a strictly limited regulatory framework which relates only to such services as storage or transmission of value belonging to others on blockchain. Gibraltar is better positioned in availability of banking service, while presenting a vibrant and sophisticated community.


maltaMalta does its best to become the “Blockchain Island“. Silvio Schembri, Malta’s Parliamentary Secretary for Financial Services, Digital Economy & Innovation, stated in an interview in March 2018 that “Malta has become a natural point of reference on the international sphere and companies such as Binance will continue to look into Malta to further expand their operations or establish a base.”

Currently Malta is producing various consultation papers and law drafts:

  1. Consultation document on a proposed regulatory framework for collective investment schemes and investment in cryptocurrencies (October 2017);
  2. Discussion Paper on Initial Coin Offerings, Virtual Currencies and related Service Providers issued by the Malta Financial Services Authority (November 2017);
  3. Malta Digital Innovation Authority Act, Innovative Technology Arrangements and Services Act, Virtual Financial Assets Act (April 2018).

In June 2018, the Maltese Parliament approved Malta Digital Innovation Authority Act, Innovative Technology Arrangements and Services Act and Virtual Financial Assets Act unanimously. These acts are not yet in force though.

As a result of the above active position of Malta it already attracted major crypto businesses such as Binance and OKEx.

Banks represent a painful issue at the moment, though it is expected, that they would start working with blockchain startups as soon as the legislation is in place.

Malta’s strong focus on gambling, insurance and fund management is only a part of the picture. On top to that, ICT expertise drives telecom and shared services, while country’s lead in healthcare boosts R&D and innovation in life sciences and biotechnology.

The following are primary regulatory aspects to think about when launching fintech / crypto business in or from Malta:

  • Financial companies enjoy Malta’s passporting rights to other EU and EEA areas, though setting up a license is not cheap. While the country is also under the uncertainty with the Brexit, it – unlike Gibraltar – may arguably win from the situation and become a UK’s gateway to EU.
  • From March 2018 the Malta Gaming Authority announced the launch of a regulatory sandbox regime, in which virtual currencies will be tested in a controlled and monitored environment.
  • A new regulatory body – the Malta Digital Innovation Authority (MFSA) – will be established in Malta under Malta Digital Innovation Authority Act. It will be responsible for the licensing, registration and certification of innovative technology arrangements and service providers in the field of DLT.
  • Virtual Financial Assets Act will regulate “VFA Exchanges” (i.e. crypto exchanges) operating in or from Malta, which is defined as “a DLT exchange operating in or from within Malta, on which only virtual financial assets may be dealt with in accordance with the rules of the platform or facility, which is licensed by the competent authority under this Act to provide such services”.
  • If the proposed instrument or a financial service falls under the conventional securities definition, it’s a subject to the regulation of MiFID II.
  • No EU passporting seems to be available under new crypto-specific regulatory framework adopted in Malta.

Similar to Gibraltar, Malta’s proposed framework is a sound one while at the same time not being too over burdensome or bureaucratic for industry. While it may potentially attract UK fintech and banking startups after the Brexit is in force, Malta still needs to convince the banking system to follow.

If you’re keen to find out more, the upcoming Malta Blockchain Summit runs from November 1-2 and spans four conferences hosted over two days. Key confirmed speakers include Malta’s prime minister Joseph Muscat, CEO of the MFSA Joseph Cuschieri, TechCrunch editor-at-large Mike Butcher, and managing director of Samsung NEXT Europe, Felix Petersen, to name a few.

Register here and get a 25% discount with the code 25MBSDCTM52832. 


GermanyGermany has a well-established financial regulation and a diverse fintech scene. Berlin is the largest fintech hub in Germany, followed by Frankfurt and Munich. It is also as a relatively cheap destination for launching and conducting a business.

The German Federal Supervisory Authority (BaFin) carefully performs analysis of each crypto company case on an individual basis, and while it’s not a full-scope regulation, it allows for innovative companies to enter the market, and invites the business to the dialogue. Curiously, this approach is similar to Singapore (case-by-case with no over-regulation & application of existing financial regulation), and at least a couple of important fintech hubs from Germany and from Singapore even partner with one another.

And banking system in Germany rocks! At least 6 banks/e-money institutions (VPE & Solaris included) have already started working with fiat & crypto under the license from BaFin, with a few more banks and investment banks to start operations soon.

Berlin became home to the IOTA Foundation, the first Ethereum office was opened in Berlin just a few months after the Ethereum token sale, Solidity was written in Berlin. High profile international blockchain conferences take place in Berlin, among them Blockstack Berlin, Crypto Conference – Meet the International Crypto Community in Europe, Event Horizon 2018, Cube Tech Fair, BlockShow Europe, Tech Open Air. BerChain and the Startup Berlin Group are local blockchain community hubs.

The following are primary regulatory aspects to think about when launching crypto business in or from Germany:

Berlin became home to the IOTA Foundation, the first Ethereum office was opened in Berlin just a few months after the Ethereum token sale, Solidity was written in Berlin. High profile international blockchain conferences take place in Berlin, among them Blockstack Berlin, Crypto Conference – Meet the International Crypto Community in Europe, Event Horizon 2018, Cube Tech Fair, BlockShow Europe, Tech Open Air. BerChain and the Startup Berlin Group are local blockchain community hubs.

The following are primary regulatory aspects to think about when launching crypto business in
or from Germany:

  • BaFin has an extensive and well-developed regulation regarding banking and financial services, with passporting rights to other EU and EEA areas. A note to a business: pay attention to every single detail, filing for a license is tricky.
  • To the best of our knowledge no sandbox regime for crypto projects is available in Germany, including Berlin. Nonetheless, BaFin authorization is required for principal broking services and multilateral trading facilities dealing with crypto, for commercial mining pools and for cryptocurrency exchanges. General principle for regulation is “same business, same risks, same rules”.
  • In February 2018, BaFin published ICO statement from a securities law perspective. The statement do not act as new law but rather a guidelines. The core idea of BaFin is that there is no ICO-specific legal regime, and that once a token is classified as a particular type of legal instrument, the regulatory implications would follow in ordinary course.
  • In February 2018, another German state body – the Federal Ministry of Finance – published guidance on value-added-tax (VAT) exempt treatment of bitcoin and other virtual currencies.

In general, Germany has a well-developed financial regulation (though not an easy one), an advanced approach in regulation towards crypto, a welcoming banking sector, and a highly developed startup ecosystem.

Hong Kong

hong kongHong Kong is the decades-old rival to Singapore for the position as Asia’s premier financial center, which has recently outscored Singapore in managing China, Taiwan and Japan offshore wealth.

In terms of blockchain and crypto regulation Hong Kong takes a way less proactive approach compared to Singapore (and this is what makes the real difference). While government bodies create an economic infrastructure to attract crypto startups, the regulation is not there yet.

In terms of banking services, Hong Kong it is still a bottleneck situation, and it’s unclear when it would change.

Hong Kong aims to be one of the key fintech-friendly places in Asia: the Hong Kong Monetary Authority (HKMA) established Fintech Innovation Lab, the Fintech Career Accelerator Scheme, a program launched in December 2016 aimed at nurturing talents, Fintech Supervisory Sandbox was launched also in 2017. Hong Kong welcomes many incubation and acceleration programs, among them SuperCharger Fintech Accelerator and Accenture’s Fintech Innovation Lab.

In Hong Kong, local scene represents a mix of innovative platforms and startups (including blockchain), accelerators, venture capital firms, HNWIs, government-run hubs and major banks. Another forte is Hong Kong’s being a gateway to China.

The following are primary regulatory aspects to think about when launching crypto business in or from Hong Kong:

  • Complicated financial regulation. Hong Kong’s rules and regulations make it difficult to set up crowdfunding platforms, payment firms and peer-to-peer lending operations, and to secure operating licenses.
  • In September 2017, Hong Kong’s Securities and Futures Commission (SFC) issued the statement on ICOs warning that parties engaging in a “regulated activity” are required to be licensed by or registered with the SFC irrespective of whether the parties involved are located in Hong Kong, so long as such business activities target the Hong Kong public unless an exemption applies
  • Where tokens do not qualify as regulated investments, the following regulatory regimes may be triggered, such as deposit taking regulations, consumer protection legislation, provisions applicable to “stored value facility”, etc.
  • Certain requirements relating to automated trading services and recognized exchange companies can be applicable to the business activities of the cryptocurrency exchanges.
  • In February 2018, SFC again issued the alert warning investors to the potential risks of dealing with cryptocurrency exchanges and investing in ICOs. SFC confirmed that secondary trading of digital securities without a license will be sanctioned.

As others, Hong Kong views that where digital tokens represent securities such activities shall become subject to full blown securities regulation. And while the Hong Kong and Singapore compete for being #1 (even though a cooperation agreement have been signed), smart startups choose both for different types of operations and for different partner/customer pools.

Finally, here is our check-list that may help to wisely choose the place to setup a fintech startup in blockchain space:

  1. Financial regulation. The team needs to understand what type of business operations are considered regulated financial activities, what financial licenses are required to conduct such activities in the country where the project expects to incorporate, and how these licenses operate outside the particular country.
  2. Crypto regulation. The team needs to analyze the regulatory framework for crypto in the country and find answers to questions such as: if any regulation has been adopted yet, are there any crypto licenses, and if a sandbox regime is introduced, and if any or all of the above is applicable to the financial services type of business.
  3. Crypto-friendly banks. The team needs to make sure that the banking system is also crypto-friendly in the country that is positive to crypto from the regulatory point of view and identify those banks which are able to service both fintech startup and its clients’ operations. Project team needs to understand and comply with requirements banks intend to apply in relation to fintech startup business operations, importantly antimoney-laundering (AML)/know-your-client (KYC) rules.
  4. Project team needs to screen the business environment in the country of prospective business operations what is the forte of the country, what type of business it is already attracting, what kind of community & network may emerge and how it may boost your startup growth.

Feel free to add or tell us about the country of your choice scored by our check list!


Author disclosure:

Zeus Exchange is a hybrid trading platform that bridges financial and crypto markets legally and transparently. Zeus Exchange team combines expertise in trading, financial technologies, investment services, brokerage, hedge funds, startups, and blockchain development.

Ingvarr advises financial enterprises, emerging technologies start-ups and high net worth individuals, we provide tech-savvy counsel on closing deals effectively and navigating the evolving regulatory landscape. Ingvarr team has an internationally recognized expertise in legal strategy, corporate, M&A, tax and finance.


Featured image: Illustration by Marina Demchenko (Mamihlapinatana Studio)