Besides its heavenly blue waters and unique natural attractions, the Caribbean is a hub for crypto innovation and crypto-native companies.
The region launched the world’s first Central Bank Digital Currency (CBDC), The Bahamian Sand Dollar. The Caribbean has a thriving cryptocurrency industry and is home to several prominent exchanges. The region has significant opportunities for growth in this sector, and the government is actively encouraging the development of Blockchain projects.
Investors and policymakers in the crypto space must know that the Caribbean has established itself as a critical player in the industry and has the potential to become a major player in the shaping of its future. Here’s why…
Favorable tax regimes
The Caribbean attracts crypto investment with its lenient approach toward financial regulation. In Bermuda, there is no income tax or capital gains surcharge imposed on income earned from crypto investments, which is an attractive feature for many crypto investors. The government is also actively promoting the use of blockchain applications in government services and creating a favorable environment for businesses to develop and make use of these new technologies. For instance, your tax payments can be made using blockchain-based stablecoins.
The Cayman Islands, well-known as a tax haven for both individuals and businesses, has favorable tax rules for Bitcoin. There is no Corporate Tax on enterprises, nor Income Tax or Capital Gains Tax on residents for cryptocurrency transactions, as there is for traditional financial activities in the country.
Appetite for compliance
On November 2nd, the 16th occurrence of the Caribbean Regional Compliance Association Conference (CRCA) commenced in the Bahamas. Composed of several key speakers, the CRCA conference discusses compliance on a national and regional level and explores global compliance missions, including Anti-Money Laundering (AML), sanctions compliance, and anti-bribery and corruption.
CRCA was founded in 2005 with a vision to promote best practices in regulatory and compliance standards in the region. Since its foundation, CRCA has been a platform for regulators and industry leaders to exchange ideas and explore synergies in promoting international standards and best practices within the region.
Leveraging blockchain technology
Besides facilitating payments by accepting crypto, the Bahamas is a true innovator and were the first nation in the world to introduce a CBDC, the Sand Dollar. A digital wallet can be accessed by users through a physical payment card or a mobile application, and information gathered from regular transactions can be applied to microloan applications. While the regulations around cryptocurrency and CBDCs in the region are still maturing, this initiative marks an important milestone in the blockchain and crypto industry.
The Caribbean Tourism Organization (CTO) steered the tourism industry toward blockchain technology and cryptocurrency in 2018. The organization signed an agreement with Bitt Inc., a blockchain business based in Barbados, to develop tourism products and services. Tourism is a prime business in the Caribbean region and this agreement implies that the crypto industry is becoming more popular in the area.
“In particular, Blockchain Financial Services have the potential to advance the objectives of specific programs and activities within the tourism sector,” said the CTO secretary general Hugh Riley.
In 2021, the Caribbean area announced the launch of DCash as a digital analog of the national currency. DCash became accessible for trade on March 31, 2021. This announcement marked a new era for the world economy and cryptocurrency. It introduced the world’s first fiat-pegged stablecoin as well as the first successful implementation of blockchain technology.
Big players took the initiative
Huobi Global, ranking 7th among the top global cryptocurrency exchanges according to Forbes, announced plans to relocate its headquarters to the Caribbean, becoming the latest crypto business to do so as regulators around the world crack down on the industry. The company plans to open a subsidiary in the Cayman Islands and expand into Jamaica, the Bahamas and other Caribbean islands.
“One of our biggest goals is to go all in the Caribbean. It has a very crypto-friendly community” Justin Sun, Huobi Global board member, tweeted on November 2, 2022.
One of our biggest goals is to go all in the Caribbean. It has a very crypto-friendly community, and Dominica🇩🇲 is one of the frontrunners.@HuobiGlobal will move the HQ to the Caribbean, working closely with Dominica to develop #crypto infrastructure.https://t.co/FMAWKMMlFK
— H.E. Justin Sun🌞🇬🇩🇩🇲🔥 (@justinsuntron) November 2, 2022
The Caribbean has seen rapid growth in the past decade, with many countries moving towards digital assets. This is because the region is still in its infancy stages and is looking to catch up with other developed markets. The Caribbean region resembles an attractive investment opportunity for investors in the crypto space for multiple reasons, from tax-free income to favorable laws and regulations. It will be no surprise to see more enterprises relocating their foundation to the Caribbean soon.
Having said that, cryptocurrency risks exist and are real. Regulations may need to mature quickly in the Caribbean to keep up with the growing volume of crypto business and to protect the financial stability of the nation, the enterprises and the consumers.
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