As a Bitcoin and cryptocurrency trader, the use of e-Residency for identification in online exchanges would be super useful and solve a huge headache. Currently KYC is an slow process that can take months — in fact I am currently waiting for an exchange who are waiting for a ‘paper’ utility bill with my address on it which isn’t even possible since I don’t receive paper bills. Needless to say these KYC and online identity systems are outdated and are in urgent need of modernisation such as e-Residency.
Kudos to you, and Estonia for pioneering digital governance. Hopefully though Estonia catches up with setting a better example when it comes to crypto currencies. My partner, who is Estonian and I thought about returning to Estonia but after investigating the laws around Estonian taxes and Bitcoin it seems like a terrible place for us. 25% income tax on capital gains + ~30% social taxes? Where’s the incentive? That is quite simply ridiculous. How many pioneers of tech who have quite a small fortune in crypto will never come to setup in Estonia because of this? Blockchain adopters are some of the brightest people whoEstonia want to be attractive to and so this insane tax rate is a case of missing out on more because the government wants too much. Therefor Estonia is very backward in this regard and not creating the right image. I don’t see how Estonia can afford to do this with a dwindling population of youth.
Here’s my suggestion:
Come up with a very attractive and simple tax for people with crypto assets and crypto businesses. All these crypto people will then have a legal incentive to create businesses in Estonia, which will further incentivise the need for e-Residency.
What will likely happen then is somebody will base their cryptocurrency exchange in Estonia and they will promote the usage of digital identity. Do you realise how much these exchanges profit? Imagine having a billion dollar exchange in Estonia and getting a small % of tax from something like that would be far more than trying to get ~53% from a dwindling economy.
There is currently around $80 billion USD in the total market cap of crypto currencies, which is more money out there then even many countries, especially Estonia, yet you do a search for Estonia around Bitcoin and all that comes up is negative image of a exchange which seems was unfairly taken to court and forced out of the country, or a statement from the Federal reserve of Estonia saying it’s a ponzi scheme. How does it make any sense to be so closed off to having this crypto money come into Estonia when there is so much of it and it is so easily available? Time to wake up, or face possible redundancy. Estonia cannot afford to not be tapping into this market much more.
Anyways, keep up the great work. If Estonia doesn’t come up with the most lucrative incentive to hold your Bitcoin/crypto business in your country I will be really surprised. But the clock is ticking.