Earlier this week, the Isle of Man received a great deal of mainstream press, deservedly so, for its innovation-friendly climate and straightforward bitcoin regulation. The Manx government has successfully turned this quirky island off the coast of the U.K. into one the world’s foremost technology hubs.
Escaping to the Isle of Man is an understandably attractive option for bitcoin startups, especially given the regulatory malaise here in the U.S. Before you pack your bags however, it’s important to know that simply relocating your business does not necessarily absolve you from regulatory responsibilities in the states.
Wait, what?! Yes, it’s true.
In July 2011, FinCEN issued guidance clarifying (read: “broadening”) its definition of money services businesses to include foreign-located MSBs. Therein, the definition was rephrased to state that an MSB is ‘‘…[a] person wherever located doing business, whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States…” Further, according to FinCEN, “[t]his includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.” This broad language seems to leave little room for exceptions. Ironically, there is an exception (in the footnotes) for foreign MSBs that merely maintain a U.S. bank account. Given the “derisking” trend, this would appear to be a moot point. But again, we digress.
For years, crypto businesses have been told federal clarity is “coming soon.” At this point, “coming soon” has started to sound like a movie trailer
The clearest lessons regulators are sending—and what your program should do next. If you want to know what regulators care about, don’t start with
Derivatives, Commodities, or Gambling? The Regulatory Crossroads Ahead From Signal to Scrutiny In Part 1, we looked at why prediction markets have captured so much