Starting your own company in FinTech might seem daunting, especially with the skyrocketing levels of competition in the sector. Indeed, big industry players like Coinbase Asset Management or Grayscale Investment are leading the game, while startups and smaller-sized companies are catching up.
If you have a dream FinTech startup idea but are not making any moves to make it a reality, it’s most certainly due to obstacles concerning corporate structure, financing, compliance, and, of course, competition. But what if we told you that most of these obstacles are nothing more than myths, easily debunked with a bit of expertise and practical examples.
This is what this page is designed to do; here are 7 of the most common myths about FinTech incorporation and advice on how not to fall victim to bias.
1. Starting Your Own Company is Always Expensive
It is mostly true that money rules the world, but in corporate structuring, it is not always the case. Indeed, your scale of options is broader if you have enough financing, but those who are on a budget still have a choice among more affordable options. When it comes to offshore company formation, jurisdictions like Lithuania, Estonia, and the United Kingdom have positioned themselves as attractive destinations. These countries offer reasonable licensing costs in the larger context of European onshore incorporation.
Offshore destinations go even further in terms of how much you can save. In countries such as the Cayman Islands, Seychelles, or Saint Vincent and the Grenadines, company formation and maintenance costs are significantly lower compared to European jurisdictions. These locations are often chosen for their simplified regulatory requirements, tax neutrality, and flexible corporate laws that allow founders to start operating faster and with fewer formalities. So, if you can’t afford to spend a lot, it might be a good idea to check out offshore options first and foremost.
2. All the Strategic FinTech Business Locations are in the EU
Picking up on the point made above, not all beneficial locations are in the EU or other rigidly regulated locations. In fact, there’s been a surge in entrepreneurs choosing a business registration in Panama as a watertight and future-proof alternative. The list below highlights the main strengths of such jurisdictions:
- The Cayman Islands offer a tax-neutral environment, fast company setup, and flexible laws. It is best suited for crypto funds and FinTech startups, though it has limited access to EU banking systems;
- Seychelles is known for its low costs, minimal reporting requirements, and strong privacy protections. It works well for early-stage FinTech projects, but its institutional reputation is comparatively weaker;
- Saint Vincent & the Grenadines provides no corporate tax and easy maintenance, making it ideal for low-budget FinTech ventures. However, it suffers from low regulatory credibility;
- Belize allows for quick setup and offers a favorable tax regime, attracting payment and e-commerce firms. Its main drawback is heightened compliance checks;
- Mauritius stands out for its stability, extensive tax treaties, and position as a regional gateway, making it ideal for FinTechs focusing on Africa and Asia. The only downside is a slower licensing process;
- The British Virgin Islands (BVI) is a trusted offshore hub with a solid legal foundation, often chosen for holding and investment vehicles. However, increasing transparency demands have become a growing concern.
All in all, while less costly, these locations remain internationally reputable and provide the same level of legal protection with a lighter bureaucratic burden.
3. Physical Presence in the Country of Incorporation is Obligatory
Indeed, if you aim at incorporating in the EU, you will have to establish physical presence in one of the Member States – ideally, in the one where you’re planning further licensing. Physical presence is part of the economic substance requirements, which require an actual office space in the country, where you and your team perform operations from, as well as resident directors and/or employees. Fulfilling these conditions is often costly and burdensome, especially for low-budget startups.
Offshore incorporation solves this problem at the snap of a finger. Most offshore locations do not require physical presence whatsoever and even allow for a fully remote incorporation, meaning you won’t have to travel to the country to launch your business there. Some examples include Seychelles, Belize, and Saint Vincent and the Grenadines. In these countries, company setup, management, and reporting can be handled entirely online through a registered agent.
4. Company Formation Is Notoriously Long and Can Take up to a Year
While FinTech company formation can be an elaborate and layered process, it never takes years in practice if all the necessary documentation is prepared in advance. That is to say, you must have all the paperwork on you before applying to the local authority with your incorporation request. With thorough preparation, you can shorten the process up to 1-2 months, 1-2 weeks, or even a couple of days, depending on the jurisdiction.
Offshore jurisdictions often offer much faster incorporation timelines, sometimes completing the process in as little as a few days. Since these locations usually have simplified registration procedures and accept remote submissions, startups can avoid lengthy bureaucratic steps common in highly regulated regions. This speed, combined with lower costs and minimal physical requirements, makes offshore incorporation an attractive option for founders looking to launch their FinTech ventures quickly and efficiently.
5. Taxes are the Biggest Financial Setback of FinTech Incorporation
Taxes are among the main financial hurdles for startup companies. In locations across the EU, taxation rates are significant even for entrepreneurs with flexible budgets. However, there is a solution in the form of offshore jurisdictions, which offer various tax incentives to boost innovation and help startups and small-sized businesses grow. The most popular examples include the Cayman Islands, Belize, Seychelles, Mauritius, and the British Virgin Islands (BVI).
Offshore jurisdictions often provide much lighter tax burdens, including zero corporate tax on foreign-sourced income, no capital gains tax, and minimal reporting requirements. This allows founders to retain more of their earnings and reinvest in their business instead of paying large amounts to the government. For early-stage FinTech startups, these incentives can make a huge difference, giving them the breathing room to focus on growth, product development, and market entry without being weighed down by heavy taxation.
6. Not Having a Share Capital Guaranteed Failure from the Start
Many aspiring FinTech founders worry that without a large share capital, their company is doomed from the beginning. In reality, requirements for share capital vary depending on the jurisdiction and type of license. While some EU Member States or highly regulated licenses set minimum capital thresholds, offshore jurisdictions often let companies start with very little or even no share capital, making them an attractive option for startups on a tight budget:
- Cayman Islands – flexible laws and low capital requirements;
- Belize – easy and cost-effective incorporation;
- Seychelles – remote setup with minimal bureaucracy;
- Mauritius – fast registration and business-friendly environment;
- British Virgin Islands (BVI) – reputable offshore hub with low startup costs.
These options allow founders to focus on growth and delivering value instead of being weighed down by heavy initial capital demands. Consequently, a small share capital does not stop a company from attracting investors, building products, or growing successfully.
7. Building a FinTech Startup From Scratch is Impossible without Experience
The last myth on our list is a common pain point as much as it is a common misconception. If everyone had to be a FinTech expert with zero gaps in knowledge, we would have a scarce number of such businesses to begin with. In reality, many successful founders come from adjacent fields such as technology, finance, or operations, and learn the specifics of FinTech as they grow. What matters most is curiosity, adaptability, and the ability to assemble the right team rather than having mastered every detail from day one.
Moreover, founders can leverage mentors, advisors, and professional service providers to fill knowledge gaps in areas like regulatory compliance, licensing, and financial management. Offshore or EU jurisdictions that offer flexible incorporation processes, such as Lithuania, Estonia, or the Cayman Islands, make it easier to start a company while building experience on the job.
Once you settle on a jurisdiction that checks out all the boxes, delegate the paperwork and incorporation process to a trustworthy legal agent with presence and rounded knowledge of your location. Look for a legal service provider that has experience in FinTech company formation and real cases of success to rely on.
Don’t Let Misconceptions Influence Your Choice: Build a Successful FinTech Startup Today
All the aforementioned obstacles mean nothing when you have a reliable compliance partner on your side: someone who can relieve the administrative burden and undertake the entire incorporation process on your behalf. One of such agents, with a long-standing presence in European and offshore markets and over a hundred satisfied clients, is LegalBison.
Specialising in FinTech company formation all over the world, LegalBison works with startups of any type and scale. The team guides founders through every step, from selecting the most suitable jurisdiction and preparing documentation to handling licensing applications and ensuring full regulatory compliance. By partnering with experts, entrepreneurs can focus on building their product, attracting customers, and growing their business without being slowed down by paperwork or legal complexities.
With the right legal and compliance support, the common myths and barriers of FinTech incorporation, such as high costs, long timelines, strict capital requirements, and the need for prior experience, lose their power, allowing startups to launch with confidence.
