Looking to explore the offshore license business. Guidance needed.

[Facilitat3]

Hello All:

My apologies for not introducing myself earlier. I've lurked on this forum for a while now.

I have been a lawyer for roughly a year and I am interested in starting my own business. I am fascinated with offshore services but I haven't found the space to enter the industry as an entrepreneur. I live and practice law in Canada which, as we all know, is not an offshore haven and therefore not an ideal location to launch a business as a service provider.

However, over the past couple months I have noticed that a lot of offshore services firms help their clients attain licenses for particular business activities (crypto/blockchain, gambling, banking, etc.) in favorable jurisdictions. A lot of these firms advertise themselves as 'Fintech lawyers.' In this regard, I noticed that the Canadian MSB license is popular among crypto/blockchain businesses. Similarly, I've read about the popularity of similar Canadian licenses for online gambling (Kahnawake Indian Reserve, for example).

Can anyone provide me with some guidance as to how I can enter the offshore license business? How would I go about selling licensing services for the Canadian MSB license, for example? Do the internal dynamics of the offshore licensing business work the same as the offshore services industry generally (differentiation between affiliate/referrer, resellers, licensing/registration in the host country) (i.e., if I wanted to offer licensing services in a different location than the one I am domiciled in, must I have a relationship with a licensing/registration agent in the host country?). Lastly, how can I go about forming the relationships necessary to start offering these services?

I will appreciate any advice/guidance you guys can offer!

Thank you!

 

[Sols]

However, over the past couple months I have noticed that a lot of offshore services firms help their clients attain licenses for particular business activities (crypto/blockchain, gambling, banking, etc.) in favorable jurisdictions. A lot of these firms advertise themselves as 'Fintech lawyers.' In this regard, I noticed that the Canadian MSB license is popular among crypto/blockchain businesses. Similarly, I've read about the popularity of similar Canadian licenses for online gambling (Kahnawake Indian Reserve, for example).

Canada doesn't license MSBs. MSBs are just required to register with FINTRAC. No on technically licenses them, though. There is hardly any oversight and due diligence done. MSBs are required to file some reports — that's all.

This is a changing and expect the number of MSBs to diminish over the next few years. You can prepare for this new regulatory environment by studying newly enacted and pending regulations around payment service providers and virtual assets. However, when these new regulations start kicking in, I think the clientele will change a lot. It won't be as attractive to foreigners anymore, and the licenses will just be used to target the Canadian market. Not because the law prohibits taking foreign customers, but because at that point there are so many regulations, requirements, reports, and other obligations with — in most cases — no advantage over other jurisdictions. Why bother with Canada when you can do the same much more easily in Singapore, Hong Kong, UK, EU, Mauritius, Caymans?

Kahnawake is an independent nation. You can work with them directly or through someone who is authorized by them to act as an intermediary. At least one other First Nation is looking to launch their own licensing soon. And it'll probably work the same there. Being based in Canada isn't a huge advantage, but it might help if you ever need to meet them in person outside of a networking event.

Can anyone provide me with some guidance as to how I can enter the offshore license business? How would I go about selling licensing services for the Canadian MSB license, for example?

Maybe I don't understand the question, but to start a business selling a service, you just need to be able to provide the service either yourself or as a reseller.

To help companies register as MSBs, all you need to do is be able to form companies in Canada, and instruct your clients how to fill in the MSB registration form. That's it. Some might ask for legal assistance after that. Some might need help drafting policies and procedures. Do you have the experience necessary to do that? If someone asks you whether a 7,500 USDT to USD trade is reportable under LVCT or if it's a securities trade, what do you tell them?

Do the internal dynamics of the offshore licensing business work the same as the offshore services industry generally (differentiation between affiliate/referrer, resellers, licensing/registration in the host country) (i.e., if I wanted to offer licensing services in a different location than the one I am domiciled in, must I have a relationship with a licensing/registration agent in the host country?).

It varies. In some cases you can be direct. In some cases you need a local intermediary.

Lastly, how can I go about forming the relationships necessary to start offering these services?

With no ill intent and just meant as a reality check: are you maybe too early in your career to make this move?

You form the relationships the same way you form any other professional relationship: through working in the industry, getting to know people, attending trade shows, and if you're really lucky working closely with someone who has a lot of knowledge and willing to share with you.

You also need speciality skills. Study the current and upcoming laws in Canada, and wherever else you're interested in. Work on a couple of licensing projects as a partner at a firm. That'll give you lots of experience.