Initial Coin Offering in India

Updated on Saturday 30th July 2022

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Initial coin offering (ICO) in India refers to a faster manner to obtain capital for businesses involved in start-up activities, such as the use of cryptocurrencies. Since cryptocurrencies and ICOs are nascent business activities across the world, each governmental body tries to regulate the sector, in order to provide a high level of trust and stable regulatory measures, just as it is the case of India
 
Businessmen interested in opening a company in India that is involved in ICO activities should know that the local regulator does not offer a legal framework for this type of crowdfunding operation, but it does provide several warnings and recommendations concerning the usage of cryptocurrencies. Our team of specialists in company formation in India can assist with more details on the main aspects that should concern when entering ICO operations in this country.  
 

What is an ICO and how does it work?


If you want to create an initial coin offering in India, the first thing to get acquainted with is what it is and how it works.

An initial coin offering (ICO) is similar or, better said, follows the model of an initial public offering (IPO), as they both involve the process of a company raising funds. In contrast to an IPO, where the company offers securities to the investor, an ICO instead rewards the investor with a digital coin or token, which unlike securities need not confer any ownership rights in the company.

Tokens and coins issued through an ICO will be valuable assets that give investors access to a certain project's features and services rather than ownership of the business itself.

An important aspect to consider about ICOs in India, however, is that they are not that well regulated as IPOs, which is why they are considered high-risk investments.

Our Indian company formation officers can explain the main concept behind an ICO.
 

How to raise money through an initial coin offering in India


In India, as well as in other states across the world, initial coin offerings are the simplest way to raise money for private ventures. ICOs can be used in a number of ways to raise money, but the ones that are most common in India are as follows:
 
  1. by developing a project through which an Indian company issues digital tokens for sale to the general public;
  2. by forming a partnership with one or more investors who launch the initial coin offering;
  3. by launching an application through which the digital token offered to the general public is promoted; by setting up cryptocurrency stock exchanges that function similarly to the Indian Stock Exchange;
  4. by establishing a start-up company for which special government programs have been made available.

No matter the way you decide to run your fintech operations, you can rely on our company registration specialists in India for support.
 

The advantage of launching an ICO in India


India is one of the most innovative countries in Asia, with a booming economy that relies on novelty. This is also the case of initial coin offerings that are very appealing for young investors in most of the cases.

Here are other advantages of launching an initial coin offering in India:
 
  • businessmen investing in ICOs can easily target their target markets in the online environment;
  •  there are several types of tokens used for ICOs, such as the utility tokens and the security tokens;
  • ICOs can benefit from a faster fundraising activity compared to the traditional means of obtaining capital.

Should you want to set up a business that raises money by issuing virtual money, you should note that there are no specific laws for such operations.

If you are wondering how to form a company in India that deals in cryptocurrencies, you can obtain updated information from our local consultants.

 

Crypto taxes in India


As digital money is starting to be used not only as a payment method but also as a means of investment, the taxation of cryptocurrencies is on the table in India. Here is the latest news on the taxation of virtual coins and income obtained from various activities related to them:
 
  • profits deriving from virtual assets are regarded as income under Section 115 in the Income Tax
  • such profits are taxed at a flat rate of 30%;
  • a 1% tax deducted at source is also expected to be introduced on payments of digital coins for amounts of more than INR 50,000 (the tax will be paid by individuals).

 

Why invest in ICOs in India? 
 

Known as a great business destination for international businesses, especially in the field of outsourcing, India is now one of the most attractive markets for outsourcing marketing services related to ICO platforms. It is also necessary to know that most of the ICOs set up in India are registered by foreign investors and our team of consultants in company registration in India can assist on how to start a business here. Investors may consider ICO investments due to the following: 
 
  • ICOs can raise capital by using virtual currencies, such as Ethereum, Bitcoin, Litecoin or any other known cryptocurrency;
  • ICOs in India had a total value of $ 3 billion at the level of 2017;
  • Indian ICO marketing agencies can provide specialized marketing services on social media platforms that are relevant for the industry;
  • local startups started to be less reluctant to the idea of performing investments through ICOs
     
If you want to create an initial coin offering in India, you can rely on the support of our agents to register the company under which it will operate.
 

 Indian ICOs, global investment market 
 

Investors who consider starting the procedure of company registration in India for an ICO platform should know that one of the advantages of investing in this industry is that this sector is not bound by the physical borders of the country, as investments can be obtained from all types of businessmen across the world. 
 
An investment in an ICO business generally costs approximately $ 100,000 – 200,000. Those interested in how to form a company in India must know that the sector is still in its infant stages and that new policies are issued on a frequent basis; we invite businessmen to contact our team of specialists in company registration in India for professional consultancy services regarding this subject.