Startups and Bitcoins in the Isle of Man
Isle of Man is named after a wealthy merchant which later became its King. Isle’s flag — three armored legs arranged in star-like manner (triskelion) on a red background — symbolizes an ability to keep the balance despite all adversities.
One of the main legs of Isle’s political system — the High Court of Tynwald — is purportedly the oldest continuous elected body in the world. It traces its roots to 979 AD. 24-members lower chamber of Parliament — House of Keys — is dominated by politically non-affiliated individual members. At present, The House contains only one small political party — Liberal Vannin Party (3 seats).
Isle, with its 0% capital gain, stamp duty and wealth taxes, is the popular off-shore destination for numerous corporations. Banking and tourism are two leading industries there. With local GDP exceeding $4.0 billion, 80,000 of Isle’s inhabitants are among the wealthiest people in the world (per-capita tops $50,000)
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The Isle of Man is well recognized as a major destination for Internet gaming and e-sports companies. Zero corporate tax rate, friendly regulatory climate as well as multiple underwater cables, connecting this 570 square kilometers island to Europe and to UK, had made it highly attractive for European high tech entrepreneurs.
However, due to growing competition as well as to increased political pressure on Island’s government from part of Brussels’ bureaucrats, Isle of Man’s attractiveness for e-sports startup founders has been gradually diminishing in a past decade. As a result, new financial technologies companies are now slowly taking their place.
Isle of Man’s regulatory policies towards crypto are as odd-shaped as “triskelion”. On the one leg-hand, Isle’s official position is demonstratively pro-crypto. As early as July 2014 the Isle of Man Financial Services Authority (IOMFSA) had published on its web-site the brief communique peculiarly named “Virtual currencies — including Bitcoin”, which said “Recognising this (Bitcoin) trend, the Isle of Man Government has already stated that it welcomes those who can meet the necessary standards … .”.
On the other leg-hand, Isle’s financial watch-dogs demonstrated some major sings of double-thoughts. In April 2015 IOMFSA changed Proceeds of Crime Act 2008 as to include Bitcoin and other crypto-currencies. It may, of course, sound like common-sense to many crypto-enthusiasts. After all, adding KYC and AML routine to their interfaces has already became a routine for almost all leading crypto-exchanges around the world. Equally, the Act’s stipulation to have all transactions exceeding 12,000 EURO reported to authority may also be tolerated by crypto-users as an annoying but necessary form of government’s intrusion, presumably aimed at preventing major “evil-doings”.
However, there’s also the third leg-hand to this story. IOMFSA also insisted on drastically reducing this limit to 1,000 EURO. That makes a whole policy of Isle “open-handedness” towards crypto-currency internally inconsistent. What Isle’s bureaucrats are actually hinting is that they now suspect almost every crypto-users to be a crook. In that case island’s authorities shouldn’t be so engaging right from the start, which might helped many crypto-entrepreneurs to have a second, more realistic look on Isle’s “real politic” toward new, decentralized digital economy. Providing the current trend of Isle’s crypto-policy tightening is kept intact, Isle of Man may soon be converted into Chateau d’If for crypto-holders.
Business Notes for Startups Founders:
- political climate: relatively friendly;
- economic climate: relatively friendly;
- regions to focus: EU;
- industries to focus: FinTech, e-sports, e-games;
- major limitations: hardening EU regulatory climate, high costs (including hiring) of running business, increased competition;
- stimulus: low corporate income tax, excellent telecommunication infrastructure;
- opportunities: to build a FinTech company orientated on EU market.
- Cryptocurrencies and ICOs (outlook): legal (moderately negative).
The author: Svyatoslav (Svet) Sedov
Angel investor and founder of The First International Incubator for Silicon Valley Companies (FirstInternational.In) in the Bay Area, CA, USA.
- Twitter: https://twitter.com/SvjatoslavSedof
