There is a small country within the British Crown known as the Isle of Man. Located between Ireland and Great Britain; it’s famous for its exhilarating motorbike race and lenient taxation. But that’s not the only thing that’s happening on this tiny island with the 13th highest GDP per capita.
Their 80 000 residents have not herd of the 2008 financial crisis, in the last 30 years there has never been economic decline. This has been thanks to its regulation, establishing it as an online gambling epicenter. Online gambling generates 10% of the islands GDP (around £340m with companies like Pokerstars) whilst financial services are their largest economic contributor. Businesses pay no corporate tax, banks only 10% and residents 20% to a maximum of £120,000 per year, so it’s no wonder they have excelled during times of economic downturn.
Now the Isle of Man aims to use Bitcoin as its next play towards becoming the Fintech industry global leaders, officially releasing their bitcoin “regulatory framework”. Let’s have a look at their story so far.
March 26th 2014 – No license required for bitcoin businesses.
Financial Supervision Commission (FSC) ruled that bitcoin exchanges do not require a license, also appealing to businesses and individuals that their permissible fiscal policy will be extended to crypto-currency related activities; bitcoin business is embraced by the island.
June 10th 2014 – Bitcoin has full government support, planned AML regulation.
Peter Greenhill, director of e-business development for the department of Economic Developing wants to “include them [Bitcoin] under the Proceeds of Crime Act 2008 and the Designated Business (Registration and Oversight) Bill 2014.” Meaning, existing AML regulation is being updated to include bitcoin, no further regulation planned.
“Technology companies on the island can all be confident that digital currency development has full government support and the FSC is not going to penalize anyone for engaging in the sector.” – FSC
July 21st 2014 – Revision of bill to incorporate bitcoin AML regulation.
FSC States – “Certain amendments are currently being planned to Schedule 4 to the Proceeds of Crime Act 2008 which would apply the Island’s AML/CFT legislation to those involved in the virtual currencies market”. This new bill will provide the ability to oversee how digital currency operators comply with AML/CFT legislation.
Sept 16th 2014 – Bank services are cut to bitcoin business on Mann.
The company Capital Treasury Services (CTS) that allowed bitcoin related businesses to hold bank accounts cuts ties with the digital currency sector.
“Although support from government is very strong and we have been keen to get behind the government’s initiative, we are only able to do so with the wider support of the financial sector, which has unfortunately now been withdrawn.” – CTS
Sept 17th 2014 – Instabill provides banking accounts at 3-4% fees.
Instabill announces that it will offer merchant and banking accounts to bitcoin companies. Digital currency merchants will pay a 3%–4% discount rate, plus approximately 35 cents per transaction.
Feb 3rd, 2015 – Legislation amended to incorporate Bitcoin.
“The Proceeds of Crime Act, an existing piece of legislation from 2008, is being amended to embrace bitcoin and digital currencies generally.” – Brian Donegan, the Isle of Man’s head of operations for digital development and e-business.
“We’re very keen on the technology, we think it’s transformational and that we’re really at the very beginning of an explosive development in information technology.”
March 26th, 2015 –Bitcoin’s AML requirements passed.
The Isle of Man Releases its amended Proceeds of Crime Act 2008 to incorporate Bitcoin businesses, requiring adherence to AML requirements. New businesses are required to register for FSC oversight under the Designated Business Bill 2014 expected to be passed shortly, existing companies have 6 months to register.
Anyone purchasing over €1 000 in bitcoin will require AML/KYC information gathering, much lower than the existing barrier of €15 000 for traditional services.
These changed have not been welcomed with ubiquitous praise. Adrian Forbes, co-founder of Isle of Man-based bitcoin company TGBEX has stated “I can’t help feeling it will have every major scam in crypto all over the world looking to come to the island in order to get a license as well”
The Isle of Man is not without its hiccups in the tumultuous land of Bitcoin, but they are prevailing as a destination of choice. Already famous for its permissive regulation and taxation, bitcoin seems like a fantastic addition. With this new legislation, Mann aims to support credible bitcoin business at the cost of innovation. Will this end up being the right play for this cryptocurrency boom, we will find out as more countries update their stance towards bitcoin the industry.
About the Author
Rupert Hackett works for Global Internet Ventures, an Australian based investment and consultancy group developing multiple Bitcoin companies. Rupert is studying the world’s first Masters in Digital Currencies and regularly blogs for BuyaBitcoin.com.au.