Tax havens are quite an attraction to cryptocurrency businesses thanks to their less strict regulations. However, the Isle of Man has updated crypto policy to introduce further restrictions on crypto businesses in its jurisdiction.
Reportedly, the updates affect businesses operating in the cryptocurrency sector. According to the updated document, the Isle of Man Financial Services Authority (IOMFSA) will register businesses subject to new conditions.
In particular, the updated policy cites two conditions that make the new criteria to guide registration of crypto-related businesses. The conditions are that i) the businesses must have at least 2 Isle of Man resident directors. Further, ii) the business must be managed and controlled on the Island.
The updated policy is evidence of the growing tendency of regulators to increase oversight of crypto-related firms. According to Currency Analytics, this is part of the increasing norm to get stricter with the cryptocurrency sector.
Some of the reasons fronted for this strict tendency is to evaluate the real presence of cryptocurrency businesses. Traditionally, crypto businesses operate without a physical presence. Interestingly, most of them simply seek registration but operate out of far off places.
Isle of Man updates crypto policy to make oversight possible
Further, the risk of money laundering through cryptocurrencies is getting higher. Recent reports indicate that virtual currencies are driving a new era of money laundering. In particular, fraudsters are able to use the digital assets to cleanse dirty money which then gains access to global circulation.
In this light, IOMFSA is demanding real presence by crypto firms to make oversight possible. In part, the updated policy document states:
“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.”
Further, as the Isle of Man updates crypto policy, it is insisting that crypto projects must have utility for the investors. In this regard, the new policy reads: “IOMFSA will no longer grant licenses to projects that do not offer investors any utility beyond mere ownership of a digital currency token.”
