In an initiative designed to support companies in their efforts to comply with current (and future) regulatory environments, Digital Isle of Man has a dedicated blockchain office and sandbox now open for business. These developments are part of the island’s ongoing strategy to position itself as an international centre of excellence for businesses that rely upon blockchain technologies.
An island of enterprise
A self-governing British Crown dependency sitting in the Irish Sea between Ireland and England, the Isle of Man has a unique status. Geographically speaking, it lies within the British Isles but does not belong to the UK, nor is it a member of the European Union. In recent years this has allowed the island to exploit its advantageous legal and economic status. The island created four executive agencies of the Department for Enterprise (DfE) in November 2017: Finance Isle of Man, Business Isle of Man, Visit Isle of Man and Digital Isle of Man. Each is tasked with encouraging business partnerships which deploy private sector knowledge and expertise to create jobs, develop products and promote opportunities for the island.
While the DfE’s finance, business and visit agencies appear to have a clear and obvious focus, the digital agency’s brief seems to be more wide-ranging and less easy to define – which perhaps reflects the fact that the emergence, development and application of new digital technologies is usually harder to predict with any certainty.
Commenting upon the purpose and motivation driving the new blockchain initiative, Lyle Wraxall, CEO of Digital Isle of Man, explained that this move demonstrates the island is a fully supportive jurisdiction prepared to work collaboratively with the blockchain industry. Thus the DfE is seeking to accommodate both ‘premium blockchain businesses and the world’s top exchanges’. In pursuit of this aim, Wraxall revealed that the island’s legislators will introduce new tech-agnostic regulation to reflect the philosophy and best practice observed in similar high-quality jurisdictions elsewhere in the world.
The digital agency joined the British Blockchain Association (BBA) in June 2018, and its new office will play a key role in facilitating dialogue between companies and regulators. This will assist blockchain platforms in the design phase as they seek to future-proof their planned initiatives in line with all applicable legislation and regulation in various jurisdictions. On application, firms can use the new sandbox which will function as a digital test bed for new projects. These facilities, which open in March 2019, will help to streamline the process of delivering new initiatives and early adopters will be able to use the service without charge.
The Isle of Man has well-established links with digital business. For instance, revenues from the e-gaming sector (nearly 40 licensees, including international companies like PokerStars and Microgaming) already furnish 18% of the island’s GDP. And besides the substantial economic contribution of online casino businesses, the island is also home to Quanta, the first licensed blockchain-enabled lottery project, and space-oriented concerns such as ManSat and SES Satellites. In addition, there have been exchanges located here since 2013, as well as blockchain concerns such as CoinCorner, Luckbox and Qadre which all have their headquarters on the Isle of Man.
The future of cryptocurrency
Cryptocurrencies are perhaps the most controversial of the new digital assets. Ever since the arrival and acceptance of Bitcoin as a medium of exchange, digital currency has been viewed by some as a breath of fresh air for the world’s careworn banking systems, and by others as a dangerously volatile source of economic disruption. It has certainly brought an additional measure of trust and transparency to the financial world, which has been quick to seize upon the security benefits of features such as blockchain technology. However, virtual currency has also been subject to disruptive market fluctuation which tends to attract get-rich-quick speculators while at the same time dissuading genuine investors.
During some ten years of trading, Bitcoin and its many spin-offs have proved that blockchains are secure. However, large-scale hacking, theft and other criminal activities have left cybercurrency with some issues and the 2018 crash has served to confirm its reputation for volatility. But despite this, even detractors have had to admit that the original concept of digital currency remains largely intact: A currency system which can retain its value, serve as a viable means of secure transactions and exchanges, is far more practical than the concept of precious metals, and has proved itself capable of remaining beyond the influence of governments and global banking systems.
Predicting the future performance of cryptocurrency has proved extremely difficult. Most observers believe the crash is now over and that the market should start to see further gains over the longer term. However, they also warn that, with the exception of the few best-performing currencies, many minor e-coinage will simply disappear. This view is supported by the fact that the 15 top coins account for 85% of today’s market.