The Isle of Man’s financial watchdog the Isle of Man Financial Services Authority (IOMFSA) has revised its registration policy with regard to businesses operating in the cryptocurrency industry, reports Mondaq, November 13, 2018.
Increased Supervision over Crypto Businesses
According to the updated registration policy, with effect from October 5, 2018, the IOMFSA will not allow registration of any digital currency business based out of Isle of Man under the Designated Businesses (Registration and Oversight) Act 2015, if the following two conditions are not met:
- the business must have at least 2 Isle of Man resident directors; and
- the business must be managed and controlled in the Island.
- Observing the new criteria introduced by the Isle of Man’s financial watchdog, it is evident that the IOMFSA is seeking more control and supervision over any venture that is related to cryptocurrencies.
The IOMFSA gave the argument behind the newly introduced business guidelines stating that having a business venture outside the jurisdiction of Isle of Man with minimal local presence dramatically increases the possibility of misuse of finance, resulting in money laundering, and financing terrorism campaigns.
The new registration policy reads in part:
“In order for the IOMFSA to be able to successfully undertake its statutory duty of overseeing compliance of designated businesses with the AML/CFT legislation, designated businesses must have sufficient real presence to facilitate oversight.”
Moreover, the local apex financial authority also cleared that it will not register any digital-token issuing entity unless the issued token provides a “benefit” to the buyer other than the token itself.
With regard to the definition of “benefit” and its applicability on the digital token being issued, the IOMFSA clarified that it’s a subjective matter and the regulator will consider it on a case-to-case basis.
Stringent Regulations Might Be Good in the Long Run
Countries like the Cayman Islands, British Virgin Islands, and the Isle of Man are amongst the preferred destinations for crypto projects to establish themselves in.
Their ease-of-ICO administration, laws, and tax benefits make them an attractive place to set-up the organizational base. However, as the industry steadily makes its move towards maturity and consolidation, projects without much substance are weeded continuously out from the bulk.
Owing to this, the tax above haven nations revise their business regulations to help the crypto industry and the local economy grow together. Stringent and clear regulations also mitigate the risk of projects exit scamming or duping investors of their money.