America’s New Digital Immigration Problem

Digital Immigration

By Bill Taylor/ Contributor

A very hot topic around the globe is migration. Migrants from various countries in the Middle East and Africa are flowing into Europe. Migrants from various Spanish-speaking countries in Mexico and Central America are flowing into the US. SO, you may very well ask, why are these migrants flocking to the U.S. and Europe AND what the ‘blank blank’ does that have to do with fintech/crypto/blockchain?

The first question of why is easy. Everyone wants an opportunity for a better way of life. Now, the fintech link. The hottest, most topical AND most innovative form of capital formation is the initial coin offering (ICO), also using the alias STO (security token offering), and sometimes TGE (token generating event). This new way of raising capital is…….let’s use the word……HUGE. And controversial. The tokenization of assets, and how they are regulated, is creating a CRYPTO MIGRATION seeking a better regulatory life.

Who are these crypto migrants and where do they come from? These new ‘migrants’ are entrepreneurs, visionaries, financial companies, hedge funds, etc. and they are coming from countries (jurisdictions) such as the U.S. that are not keeping up with (and even inhibiting) the financial innovation that other countries are embracing.

So where are these forward thinking jurisdictions that these ‘migrants’ are flocking to? Switzerland, Gibraltar, Malta and even the UK are a few of many that come to mind. Think of this as the crypto equivalent of firms moving to Ireland, Bermuda, Cayman Islands, etc. because of a favorable tax environment. Hmmmm! Gee, some of these countries are the same ones with favorable crypto regulations. Go figure, and thank you U.S. SEC and IRS.

So while the U.S. and its regulators continue to discuss exactly what a cryptocurrency is and how ICOs should be treated, the innovative, nimble and forward-thinking countries are getting huge capital inflows AND a new sophisticated tax base (crypto migrants).

Even England, with the Brexit decision, is helping London adapt to becoming a hub for crypto activity. Will this change? Remember, if they had their way, the SEC would declare everything from a diesel truck to Mom’s apple pie a security. So, hello Gibraltar, Switzerland and Bermuda – here we come.

Bill Taylor is Managing Partner at Fintek Capital & a frequent contributor to FintekNews