The Isle of Man, a tiny, Celtic island between the west coast of England and Northern Ireland, is soon to pass legislation that its government hopes will help it become a true paradise for digital currencies. The island will be the first place in the world to pass a “regulatory framework” for the alternative payment method.
The legal framework sets legislation in place for FinTech enterprises to operate more freely and securely. It creates a government jurisdiction for the industry, which means it has a practical responsibility and authority on how the marketplace operates.The island is known for actively promoting the use of the online currency, and is favoured by startups.
Bitcoin uses peer-to-peer technology to process transactions, and there’s no central bank or authority. Instead, it’s managed by a network maintained by the users. This decentralisation creates volatility: In January, Bitcoin crashed by nearly 30%. It crashed even harder in 2014, which spooked UK banks, causing them to stop working with the digital currency industry on the Island.
Now, the island’s government has come up with a stronger framework to give more support to digital currencies in such situations.
The Isle of Man is a 30-mile long island off the coast of north-west England with a population of around 85,000. Yet it has more than 170 startups, 20 of which are based around currency; is energy self-sufficient; and has a GDP of £4 billion.
Digital companies make up 20% of that.
Indeed, the Isle of Man has established itself as a key player in the world of FinTech. It’s a surreal juxtaposition: Although it’s a small, largely-rural landscape, Bitcoin has taken off considerably. You’re likely to go into a coffee shop or local pub and find someone paying for a flat white or a pint of bitter with Bitcoin. Taxi drivers also accept the digital currency.
It’s a world away from the urban bustle of the London tech hub Shoreditch and Silicon Roundabout — but the same high-tech futurism is there.
Head of e-commerce for the Isle of Man, Peter Greenhill, tells Business Insider that the aim is to be the most attractive place in the world for cryptocurrency companies to work from. Greenhill explains that the island’s parliament (the longest serving in the world, he says), will safeguard businesses from online crime through its Proceeds of Crime Act 2010.
It’s also “is a hotbed for tech startups” due to its tax advantages — there’s zero corporation tax, capital gains tax, inheritance tax, and a low personal tax.
Greenhill says the Isle of Man offers “friendly but firm legislation” for digital currency startups. It is essentially an offshore haven: There’s no corporate income tax. (Banking business and land and property companies pay 10%.)
“We have the regulations and infrastructure in place to become a world leader in digital currencies,” Greenhill tells Business Insider. “We already have companies coming in and setting up. We see this as the future and we want to be at the centre of development in this area.”
By 2020, Greenhill expects the industry to grow by 23%. He touts the sector to see huge economic gains from which the Isle of Man can benefit. “FinTech is growing and we’re a great landscape for development.”
Greenhill says that leading software engineers go to the island to make use of the low taxes. He says that its attraction is bolstered further because of a cool climate, which helps with running high-power data centres. and ultra-fast broadband services. There’s also a “tight FinTech community” with common goals to see the sector strengthen.
“It’s about offering the right environment to developers. We’ve got more than 25 digital currency businesses based on the island” Greenhill adds. “We’re a microcosm of the UK and other countries — a testing site and active experimentation lab for new technologies.”
The Isle of Man isn’t just about digital currencies, though. It’s a favourite of telecoms companies and was also a major part of introducing the 3G network for mobiles. It will soon be the first place on earth to trial 5G services and also boasts a big eSports community.
The island is going to launch the “ICT University” at the end of 2015 with tech company partners HP and Huawei. The facility will be open to up to 500 students and will act as an “incubator” for talent. It will work alongside UK universities and plans are being put in place to link with Canary Wharf finance/tech accelerator Level39 as an offshore partner.
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