So, mid 2018, I moved to Malta to set up a company, with the goal of building a blockchain architecture to manage the flow of virtual items and tokens, peer-to-peer transactions, digital scarcity, item ownership, and storage of player data, integrate it with Unreal 4, and build a sandbox survival game around it, working with some of the best talent from the videogames industry, and some of the smartest people from the blockchain industry.

In order to raise funds to create and then develop the platform, as well as cover all related expenses (salaries, advertising, etc.), I decided to launch an ICO.

Here is a step by step guide of how I've done it. This is only one of many ways to launch an ICO, and each country has different rules and regulations. I chose Malta because it's a welcoming jurisdiction for blockchain companies, with low taxes and it's a place to do business easily.

Setting Up the Company

Setting up a company in Malta is extremely easy. All you need to do is provide is basic information such as:

1. Name of the company

2. Authorized and issued share capital

3. Shareholders, directors, company secretary

4. Detailed information on the business activity with an understanding of the turnover/purchases etc.

Due diligence includes a professional reference, a bank reference, a verified copy of your passport, and a proof of address.

Companies in Malta are taxed at 35% on all profits. On the distribution of a dividend the shareholder may claim a 6/7 refund bringing down the effective tax rate to around 5%

On receiving the due diligence documentation, share capital and payment of fees, the company can be set up within 3 working days.

Fees vary depending on the company structure, but the registration is roughly €1500, additional costs if you want to register your company at the office of the accountant, plus additional admin fees.

Registering Trademarks

I registered trademarks for the game title - DECIMATED - and cryptocurrency token - DIO - the Italian word for God. So - I now own the trademark for God!

Registering a trademark can be done in different ways depending on your country of residence.

First you need to file a basic registration in your home country and then on the basis of this basic registration you can file for the international registration administered by the Madrid System through WIPO (World Intellectual Property Organization), and they you will have protection in all other countries that you choose.

A European Union trade mark (EUTM) grants you exclusive rights in all current and future Member States of the European Union through a single registration, filed online. It is valid for 10 years and can be renewed indefinitely, 10 years at a time for each renewal.





EUIPO trademark registration fee: €850

In the US, You can file a trademark application on your own, or hire an experienced trademark attorney who is licensed to practice law in the United States.

USPTO trademark registration fee: $225

The World Intellectual Property Organization (WIPO) is an agency of the United Nations. WIPO was created in 1967 "to encourage creative activity, to promote the protection of intellectual property throughout the world."

The Madrid System allows applicants from 97 members such as the EU, the US, China, Japan and Korea to first file a trademark in their home country as a so called basic registration and then extend it potentially to all 97 members with one single application. So with just two trademark applications you can have protection in up to 97 countries and regions (e.g. the EU).

WIPO international registration fee: €555

Creating a Smart Contract

Setting up the smart contract is quite simple, but it's important to have planned your tokenomics, and to define if your token is a security token, or a utility token.

Utility tokens represent future access to a company’s product or service. The defining characteristic of utility tokens is that they are not designed as investments; if properly structured, this feature exempts utility tokens them from federal laws governing securities.

If a crypto token derives its value from an external, tradeable asset, it is classified as a security token and becomes subject to federal securities regulations. Failure to abide by these regulations could result in costly penalties and could threaten to derail a project. However, if a startup meets all its regulatory obligations, the security token classification creates the potential for a wide variety of applications, the most promising of which is the ability to issue tokens that represent shares of company stock.

This process eliminates the need for venture capital and establishes a direct relationship between startups and an open field of crypto investors. In many cases, there will be more traditional seed funding or private sales involved, but it is the public sale that will generate the most capital.

Once your smart contract is set up, you can test it on the Ropsten testnet, via MetaMask and MyEtherWallet. You can issue dummy tokens to test sending them to other addresses, and when you are satisfied, you can launch the smart contract on the main ethereum net.

Regulated and Restricted Jurisdictions

At the time of writing this, ICO's are banned in the United States, China, Japan and South Korea, and it is advised to not sell tokens to any citizens of these territories, to avoid getting into trouble with the SEC and other authorities.

Malta is a welcoming jurisdiction for ICO's, provided that companies are registered and regulated by the Malta Financial Services Authority (MFSA). Companies must notify the MFSA of their intentions related to crypto, have their whitepaper professionally reviewed by a legal team, the company and team must be audited and background checked and blockchain technology penetration tested. The regulation is expected to come into effect in late 2018.

It's also necessary to determine if your token is considered a security or utility token, and you need to tread carefully the way you promote your token, it's sale, and its use. In many cases, certain terminology must be avoided, such as investment, return on investment, trading on exchanges, and anything related to the token being a store of value. If your token is in fact a utility token, it is important to explain that purpose. As with anything related to finance and law, it's becoming a confusing and convoluted system, with a lot of grey areas and unknowns at this time. But being aware of this, will steer you on the right path and make sure that you are not getting yourself into a risky situation.

The Maltese Parliament will be passing three cryptocurrency and blockchain bills in 2018. These are to protect investors, the general public and filter the sector of cash grabs and scams.

These bills are fast making Malta into a crypto space of choice for investors and company owners who are interested in finding a favourable jurisdiction to set up their cryptocurrency or blockchain business. Renowned exchanges such as Binance, DQR and OKEx have already announced their setting up in Malta.

Below is a brief description of each bill.

The Virtual Financial Assets Act (VFA)

This VFA deals with the regulation of initial coin offerings (ICO) and states that projects attracting funding through ICO are obliged to publish White Papers. These are a prerequisite imposed by the Maltese authorities and should contain a description of every aspect involved in such project. Additionally, the bill requires that the issuer’s financial history must be made public.

The Malta Digital Innovation Authority Act (MDIA)

The MDIA infers that an industry-specific governing body will be set up. Such an authority will be responsible to support the development and implementation of the guiding principles described in this Act and to promote consistent principles for the development of visions, skills, and other qualities relating to technology innovation, including distributed or decentralised technology. Moreover, it will exercise regulatory functions regarding innovative technology, arrangements and related services.

The Innovative Technology Arrangements and Services Act

This bill concerns the regulation of designated innovative technology arrangements. It will be the mechanism by which blockchain-based enterprises are recognised as such under the law, and as such will be the basis for the previous two bills to operate.

The introduction of these new bills gives any interested investor a clear picture of the legal framework required to set up a legitimate cryptocurrency business in Malta. Malta is proving itself to be at the forefront in creating a cryptocurrency-friendly jurisdiction and indeed has already attracted two of the biggest cryptocurrency exchanges in the world to set up offices on the island.

Banks

The biggest hurdle that all ICO's are facing internationally, is finding a bank that is willing to work with companies that are involved with cryptocurrency. Concerns over KYC and money laundering, not to mention the threat of decentralized currency exchange and digital banking, has caused most banks to slam down their shutters to new customers.

There are rumours of banks in the UK, Malta, Hong Kong, Lithuania, Latvia, Estonia, Cayman, USA and other countries who accept ICO's and blockchain businesses, but some have exorbitant fees, rigorous due diligence checks, and many will not go near ICO's at all. As a result, there are many ICO advisors and companies that say that they can help with this, but I'm skeptical. Everybody is in the same boat.

Even Binance, one of the biggest cryptocurrency exchanges has a hard time opening a bank account. Eventually they were able to open one, to allow fiat-to-crypto transactions, but it still remains a huge stumbling block for other companies involved in crypto. Their research wing Binance Labs, announced a $1 billion fund dedicated to ICO cryptocurrency startups, and is considering getting a banking license in crypto-friendly Malta to get around the restrictions.

I was fortunate enough to find a bank that was willing to open an account after reviewing our business plan, team and strategy - though the cost for onboarding and due diligence added up to around 30,000 EUR.

The process is that the banks are only interested in receiving fiat from sources that have passed their internal KYC/AML check. Any money raised through crypto and converted into fiat, they will not accept. But they will do an analysis of your crypto wallet(s), to look at the transactions coming in and out. This is not a concern if you are a legitimate business, as cryptocurrency wallets are viewable by anyone who cares to look on https://etherscan.io/ and a smart company will keep a record off all incoming and outgoing payments, even though cryptocurrencies are not subject to taxation (yet).

Charlatans, Scammers and Snake Oil Salesmen

The blockchain industry is oversaturated with so-called ICO advisors, service providers, marketing companies, lawyers and people that say they can help you with opening a bank account, since they know that this is a huge stumbling block for many people. I've been getting dozens of requests per day from shady looking ICO's with brand new linkedin accounts, generic websites that look like all the others, and ICO advisors that have about 40 current roles on their profile, all looking for an upfront fee, a percentage of your raise, and a percentage of your tokens as a bonus.

I've had scammers contact me, impersonating youtube influencers, journalists, ICO companies and more, making promises of promotion in exchange for BTC or ETH. I've started keeping a leaderboard of the number of Ivan on Techs, Datadashes and Louis Thomases that join our telegram group.

The blockchain industry is rife with sleazy con-artists, so if people are standoffish with you when you approach them, understand that they are also being contacted by dozens of people every day, trying to con them out of their money.

I've had people call me on skype to make business introductions, and all seems well, but when I ask them to email me from their corporate email address, or send over proof of their company registration or ID, they go quiet.

Then there are companies that want to bring you on as an advisor, with the promise of payment plus a token bonus, yet with a little bit of due diligence, you can tell that they are a weak company that want to use your profile to raise money for themselves. The risk is, that if they raise that money and disappear with it, it's your reputation that is damaged. My advice is to stay well away from these companies, and make sure you do your due diligence on the team, the company, the whitepaper and the contract.

As a result of the constant barrage of scammers, I decided to take my whitepaper and pitch deck off the website, and instead put a request form, so I can filter who gets access to this information.

Listing on Exchanges

Listing on exchanges is becoming a highly priced and extremely competitive thing to do. There are rumours that there will be more than 6000 ICO's listed on exchanges by Q1 2019. Exchanges such as Binance, HitBTC, Kucoin, Coinbase, Bitfinex and more, all have varying fees for listing, from 50k to several million, and reserve the right to not list your company.

The fees are rediculously high, but then, considering the amount you could potentially raise by being listed on some of the top exchanges, it might not be that big of an expense.

Digital Marketing

Promoting ICO's and token sales is currently blacklisted on Facebook, Instagram, Google and Mailchimp. This is another huge stumbling block, and is a result of too many people setting up ICO's, raising capital from every possible source, and many simply disappearing into thin air.

It is possible to be whitelisted to promote blockchain or cryptocurrency related news, but you have to prove that you have a license to do so. I submitted by company registration which has been MFSA approved, but Facebook have still not yet authorized my account. So, if you are promoting a cryptocurrency related business, you have to do it another way. In my case, I promote the game and the IP. Using blockchain might be one of our USP's but we can't actually promote it as such.

So it's very challenging to try and promote your ICO with all of these restrictions in place. The alternatives are, running bounty campaigns, attending conferences, sponsored articles and working with influencers.

Bounty campaigns are where you incentivize your community to spread your content around the internet for token rewards.

Attending conferences are a great way to network, but they are very costly to attend and organisers are charging speakers as well as attendees!

Sponsored articles range from $100-$5,000 depending on the publication. You can check website traffic on https://www.similarweb.com/ to weigh up the cost vs engagement that you will get.

Working with (youtube) influencers is a good strategy, but again, can come at a cost much higher than you'd expect that other sectors. https://famebit.com/ is a good platform to reach influencers for brand marketing, certainly for the videogame industry.

To be continued

Disclaimer: this article does not constitute legal advice. Legal aspects of launching an ICO may vary from country to country. Before conducting a funding campaign, do your own due diligence to comply with all relevant regulation.