Creating a ‘Bitcoin Island’ just off the English coast
DATE & TIME: Thu Nov 22 2018 14:03:24 GMT+0100 (hora estándar de Europa central) SIGNEE: swisstechmakers (email@example.com)
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Nestled between Ireland and England is the Isle of Man, a self-governing country with a population of just over 80,000. Despite its small size it has its own parliament and sets its own laws; the Queen appears on the back of bank notes here, but tellingly does so without her crown.
This freedom has advantages. It attracted a thriving financial services industry in the 1970s with low taxation, then with a permissive attitude to gambling during the last decade it lured lucrative online betting companies. It’s now attempting a hat-trick with crypto-currencies like Bitcoin.
It could be a huge boost to an economy which is already punching well above its weight. Analysts estimate that $113m was invested in Bitcoin companies in the first half of this year, up from $27m during the whole of 2013. It’s a rapidly expanding pie which the Isle of Man government wants a big slice of.
As we’ve written before, Bitcoin is just the start: there are a whole range of disruptive technologies that will piggy-back on its success.
Unlike jurisdictions which have made crypto-currencies illegal, such as Bangladesh and Bolivia, or regulated them so fiercely that they stifle innovation entirely, like New York, the Isle of Man is welcoming them with open arms. So much so that it helped to organise a conference last week called Crypto Valley looking to bring in new startups, and has lent a hand creating a crypto-tech incubator programme.
The sales pitch for the island is compelling: with no capital gains tax, potentially no corporation tax and extremely low income tax, entrepreneurs could walk away with large rewards should their company gain traction. And the government’s positive stance on Bitcoin provides stability and certainty – it has begun to regulate crypto-currencies, but only enough to provide legal and financial stability, not to squash innovation.
The charming little island, with its established population of high-net-worth individuals, is not without its more tangible attractions: great restaurants, low crime, beautiful scenery. Entrepreneur Mark Shuttleworth, who became the second space tourist in 2002 when he paid $20m for a short stint on the International Space Station, is already a resident. Only the weather is a sticking point.
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Bitcoin already has a huge number of fans on the island, including in government. Chris Corlett, chief executive of the department of economic development, announced this week that residents could soon be able to pay “everything from your car tax to your income tax bill” in crypto-currencies like Bitcoin.
“There is an evolution here, given what we’ve learned about digital currencies in the last year, it was a relatively simple decision to take,” he told CoinDesk.
At last week’s Crypto Valley conference there was a host of companies ready and waiting to help Bitcoin startups move in, establish bank accounts, buy IT equipment, start accounts and even talk directly to government ministers about potential legislative issues.
One entrepreneur who has already moved to the island told me that there have been occasions when he needed to talk to a minister and got an appointment the same day. “That wouldn’t happen in the UK,” he told me. In a fast-moving, uncharted industry like crypto, that’s a huge bonus.
Kurt Roosen, chief executive of Micta, the member organisation for hi-tech firms on the island which steers government on these matters, says that the Isle of Man is “pragmatic” about Bitcoin business, but realises how important it is to do it right.
“We want to do business but we’re not prepared to prostitute ourselves to do it,” he told the Telegraph. “We’d love to be part of it but it has to be done in a flexible, not gung-ho fashion. There’s a lot of money being invested now. We can’t really ignore it.”
The balance that has been struck is to register it, but with a light touch: “It’s a bit of a petulant child that needs some adults – and that’s the role that we can play.”
In the next month or two changes to law will come in which require crypto businesses to register with the government and carry out some due diligence to avoid money laundering and other financial irregularities. But aside from that the doors to innovation are wide open.
It’s a strategy which has worked well for the island previously: internet gambling was worth almost nothing a decade ago, but today accounts for 14 per cent of the economy. The largest company, Poker Stars, employs around 300 people on the island and was sold earlier this year for $4.9 billion (£2.9 billion).
Because of this, the 2007 financial crash simply didn’t happen on the Isle of Man. The economy has had three decades of uninterrupted economic growth. The country has the 13th highest GDP per capita in the world, just ahead of the US, Hong Kong and the Cayman Islands.
Governments around the world are, by shutting out crypto-currency startups, providing the tiny island with an enormous opportunity.
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