Last year’s rise in the price of cryptocurrency, and the emergence of a new way for collecting money from the public – Initial Coin Offerings (ICO) – introduced a massive rise of the cryptocurrency market valuation. At one point it peeked at USD$500 billion, and current stats are putting it at a USD$350 billion mark.
Many countries around the world changed their regulations in order to attract more of this new economy. Countries going towards enabling crypto industry regulation, attracted a significant part of the cryptocurrency companies (or at least their legal departments). Given the increasing importance of policies and regulation around blockchain and cryptocurrencies, this post provides an overview of the responses from Malta, Bermuda, Belarus, Georgia, and Belize.
The small EU state Malta, went a step further by launching the Malta Digital Innovation Authority, and implementing legislation on blockchain technology and cryptocurrency trading. This lead to the move of the world’s second biggest cryptocurrency exchange Binance to Malta. Previously, Binance had offices in Hong Kong, Korea and Japan.
This is particularly important, knowing that according to recent reports, Binance surpassed Deutsche Bank in an overall profit yield for the first quarter of 2018. With a profit of USD$146 million, Deutsche Bank reached a significant mark, however, Binance reported a profit of nearly USD$200 million, with only 200 employees, as opposed to the 95 000 employees at Deutsche Bank. This was the first time a cryptocurrency company suprased a traditional banking institution in a profit yield. Binance was not alone in the move to Malta, as many other cryptocurrency businesses fled to the friendly jurisdiction. Even the world biggest exchange OkEx announced in a recent statement that they are moving their legal department to Malta.
Another country that is announcing blockchain and crypto friendly legislation is the island country of Bermuda. Bermuda is looking at ICO legislation and regulation in particular. According to Bermuda’s regulators, they are aiming to make the island state a global leader in blockchain and ICO regulation. So far, the Swiss canton of Cug was the main place for starting cryptocurrency businesses. Switzerland’s financial regulator FINMA strengthened its regulation around ICO earlier in 2017, setting the tone for others to join. The Bermuda legislation initiative is lead by their minister of national security. They are hoping that the migration of cryptocurrency businesses will provide a new revenue resource, and new employment opportunities.
Earlier in 2018, we heard that Belarus was adopting enabling legislation around blockchain and cryptocurrency. So far, this has not produced any significant advantages, but it could surely serve as a great base for local and regional development.
Providing resources for the crypto industry
Another small state strategy is to provide resources for the crypto industry in order to attract major global players. The best example is the ex-Soviet country, Georgia, which was recently recognised as a second world power in cryptocurrency mining (China being number one). The US based company BitFury, specialised in cryptocurrencies mining, created vast data centres in Georgia, which serve as Bitcoin mining pools. In 2017, BitFury reported a revenue of USD$100million. Nevertheless, there is some criticism in Georgia arguing that the mining industry is not producing enough employment opportunities, while being a burden to the local infrastructure. They are also arguing that profits are going overseas without having an impact on domestic development.
Blockchain in a payment process
Another example of a small state strategy for the development of the crypto industry is a model by the Caribbean state Belize. Due to the enabling regulation around the crypto industry products, the major Belize exchange office 247 Exchange announced an online payment process that is integrated in the traditional fintech solutions. From now on, exchange offices will provide a channel for payments in several EU countries (Germany, Austria, Belgium, France, UK, Poland, Italy, Spain) and Switzerland, allowing the buying and selling of cryptocurrencies via a bank wire (SWIFT) and SEPA transfers.
These are some the main strategies of small states in order to be part of this new rising online economy. Small countries have to be a pioneers in a creative way in order to foster industry.
Hey there, interesting…
Hey there, interesting thoughts. We need to see wider and stronger support from governments, for example, to really boost the adoption of cryptocurrencies and blockchain. But financial institutes have their reasons for blocking such adoption. But so silly to take a fighting approach to crypto. https://gocryptowise.com/blog/the-major-banks-are-refusing-crypto-companies/