Labuan Credit Token License for Initial Coin Offering

The Trend of Labuan Credit Token License

In the swift currents of global digitalisation propelled by Blockchain technology, companies are pivoting towards innovation, progress, and competitiveness. Tokenising business operations has emerged as a strategy through the issuance of coins via ICOs, STOs, and IEOs to enhance customer relationships to scale up sales as well as potentially expand their future products or services.

E-commerce platforms have also leveraged this technology to create their own virtual coins or tokens. For example, Grab’s issuance of GrabRewards points to users for online purchases, in exchange for rewards and discounts which can be used at a later time. Similarly, Shopee offers Shopee coins, earned through purchases or in-app games, allowing users to use them for discounts during checkout or in exchange for vouchers.

Illustrated through these instances, the Credit Token License can be coupled with the Payment System, allowing the credit token business to engage with the facilities of an e-wallet, such as balance checking, transaction details, top-ups, and card linking.

For companies venturing into the digital spaces of fintech and blockchain, the Labuan Jurisdiction offers Labuan Credit Token License. This license allows companies to legally issue utility tokens to the global market, positioning them at the forefront of the dynamic intersection between technology and finance.

What is a Credit Token Business?

A credit token business is any business where a token, being a cheque, card, voucher, stamp, booklet, coupon, form or other document is given or issued to a person (customer) by the person carrying on the business (issuer).

An issuer undertakes the following: –

On the production of the token, whether any other action is also required, the issuer will supply cash, goods, or services on credit; or
On the production of the token to a third party, whether or not any other action is also required, the third party supplies cash, goods or services, the issuer will pay the third party for them, whether or not deducting any discount or commission, in return for payment to be made thereafter to the issuer by the customer.

The use of a token to operate a machine provided by the issuer or a third party shall be regarded as the production of a token to the person providing the machine.

Why Choose Labuan

Strategic location to tap into the Asia Pacific market

Shared time zone with major Asian cities for seamless interaction

Excellent infrastructure and regulations within the Labuan IBFC

OECD whitelist jurisdiction status

Recognised by prominent exchanges for entity listing (such as Hong Kong, Singapore, Malaysia, Australia, and Dubai Exchanges)

100% foreign ownership with a minimum requirement of 1 shareholder and 2 directors

Low corporate tax rate of 3%

Absence of withholding tax, stamp duty, GST, import duty, sales or service tax, capital gains tax, inheritance tax

Void of tax on dividends to shareholders

Void of tax on director fees for foreign directors

Eligibility Criteria for Labuan Credit Token License

1

Any individual or institution with initial coin offering expertise, with at least 3 years of good track record and relevant experience in the field.

2

Any regulated initial coin offering company or provider of such services from other jurisdictions with approval from home authority with the letter of consent.

3

Any licensed institutions including approved initial coin offering companies under the Financial Services Act 2013 with approval from the Central Bank of Malaysia.

Application Process of a Labuan Credit Token License

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Licensing & Operational Requirements of a Labuan Credit Token License

Operational Requirements

Have a minimum proof of fund of USD 100,000.
Maintain a minimum paid-up capital of MYR 300,000 or its equivalent in any foreign currency unimpaired by losses with a certificate of evidence from both Malaysian and Labuan banks.
Establish an operational office in Labuan with at least 2 full-time employees and a minimum annual spending of MYR 100,000. All transactions must be done with, through and from Labuan.
Transact in any foreign currency, except Malaysian Ringgit that can be used to defray expenses.
Transact only with authorized Malaysian dealers approved by the Malaysian Exchange Control.
Where technology client interface is deployed, any intrusions or malfunctions of the systems including adverse incidents discovered must be reported to Labuan FSA accompanied by the root cause and an impact analysis report must be submitted within 14 days.
Appoint an approved external auditor to carry out an annual audit which must be submitted within 6 months after the closure of each financial year.
Maintain a separate account for clients’ monies and each transaction has to be marked clearly. All withdrawals are to be reported within 3 working days.
Document all written agreements and contracts with clients and relevant parties.
Comply with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and the Guidelines on Anti-Money Laundering and Counter Financing of Terrorism through the appointment of a compliance officer.

FA Advisory offers one-stop application solutions for your Labuan Credit Token License, encompassing:

Consultation on eligibility and procedural guidance tailored to your profile.
Profiling, due diligence and guidance on documentation preparation.
Preparation of Business Plan, Financial Forecast and Operation Manuals.
Submission and supervision of the application process until approval.
Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
Tracking the license approval and handling all queries from LFSA.
Advisory services on the appropriate company structure post-approval.
Assistance in setting up onshore and offshore bank accounts.
Assistance in establishing operational and marketing or co-located offices.
Staff provision and office space rental.
Internal audit and compliance advisory.

About FA Advisory

Comprising a team of seasoned professionals well-versed in Labuan’s business landscape, FA Advisory Limited extends a comprehensive suite of services covering corporate services, private wealth management, and licensing compliance administration, all tailored to meet the unique needs of our clients.

At FA Advisory Limited, our expertise lies in delivering Labuan insights that facilitate business expansion, simplifying intricate processes, and offering valuable information to guide you through various facets of your journey.

Choose FA Advisory as your trusted partner in navigating the dynamic business landscape of Asia. With our commitment, we are your gateway to success in Labuan and beyond.

Email: advisory@finarkasia.com | Phone number: +6010-931 6678