The Isle of Man, a self-governing British Crown dependency, is known as a low tax, information technology (IT) and banking hub. As a result, it is generally seen to be accommodating towards the cryptocurrency industry, which is overseen by the Financial Services Commission (FSC). Recent developments, such as the Blockchain Office and Sandbox, are likely to further promote the island as a blockchain friendly jurisdiction.
While there is no crypto-specific regulation in the Isle of Man, the Proceeds of Crime Act 2008 was amended in 2015 to include virtual currency businesses within its regulated sector as a “designated business,” specifically those that are in the business of issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including cryptocurrencies or similar concepts where the concept is accepted by persons as a means of payment for goods.
The Isle of Man distinguishes between different types of online currencies, one of which is:
- Convertible virtual currency, which includes cryptocurrency, and can be converted into a fiat currency, either directly, or through an exchange. For a currency to be convertible, there does not need to be set rate or an established benchmark, but that merely a market exists and the ownership rights can be transferred from one person to another, whether for consideration or not.
Further, the Designated Business (Registration and Oversight) Act 2015 provides that virtual currency businesses are designated businesses, requiring such businesses to register with, and be overseen by, the Isle of Man Financial Services Authority.
Blockchain Office and Sandbox
In March 2019, Digital Isle of Man, an Executive Agency within the Department for Enterprise which supports the dependency’s digital sector, launched the Blockchain Office and Sandbox. Established to guide blockchain businesses through current and future regulatory landscapes, the primary function of the Office is to facilitate a dialogue between businesses and local and international regulators, where appropriate, and to help blockchain platforms design and future-proof their concepts in accordance with regulation. The Office also provides expertise and guidance, marketing support, and will facilitate and encourage collaboration between companies.
By following the application process, businesses will also have the opportunity to join the Blockchain Sandbox, a testbed that will provide a collaborative space for businesses to live-test their innovative product, service or delivery mechanism, and where any risks to ordinary financial consumers and the financial system are strictly contained.