Is SEC and IRS Pushing Innovative Crypto Firms Out of the U.S?
American politicians love to gush
about the US’s innovation and entrepreneurship prowess. Notable names like
Hillary Clinton and Paul Ryan have in the past referred to the nation, as the
world’s most innovative.
Nevertheless, an alarm is sounding over the States “innovation crisis.” Fewer startups are taking root, and older aging behemoths have stagnated. Federal funding cuts, as well as unfriendly SEC and IRS regulations, are causing brain drain that will adversely affect the nation’s future economic prosperity.
As an illustration, American electronics engineers and Apple’s co-founder Steve Wozniak has moved to Malta. The brain behind the first commercially viable personal computer has moved to the small Southern European island nation to open a blockchain startup. The brilliant engineer is investing in Efforce, a business focused on energy efficiency.
Steve Wozniak Moves to Malta
The announcement was made during the
pre-launch of Malta’s Delta Summit, a digital innovation conference event. He said:
“Blockchain will improve the way we use energy and lower energy consumption without changing our habits.” Of Efforce, he said that it is a “unique business model, and we can have a great impact on the entrepreneurship.”
His partner at Efforce Jacobo Visetti
said that their decision to establish Malta as their base was due to the
country’s reception to innovation. He adds that the US “was the most
open-minded country we could find in the world in terms of new technology.”
Steve further praised the Maltese
government, for its support of blockchain-based startups. Malta is striving to
turn into a “Blockchain Island” and a haven for crypto. The
government is also planning to use blockchain to improve its education and
In 2018, the government passed bills
that would form the regulatory backbone required to attract foreign financial
technology investments. The legislation effectively made Malta, the first
nation to provide legal certainty to the blockchain development space.
Malta is the Blockchain Island
In contrast to the stringent US SEC and IRS regulations over crypto and blockchain-based businesses, Malta is more forward-thinking. The nation has a lowered corporate taxes too, being a member of the European Union zone. It’s warm Mediterranean climate has also been very alluring to blockchain business owners.
As a result, Malta has already attracted some big crypto exchanges, including OKEx, ZBX, and Binance. Binance is the world’s largest by adjusted volumes and has quarterly profits beyond $200 million. Known as the fastest-growing fintech unicorn globally, the exchange has experienced growth rates of 2,700 percent in less than a year. This unprecedented growth rate is the highest in the financial market’s history. Binance moved to Malta, after facing myriad regulatory issues in the Asia Pacific.
According to a KPMG report, multinational businesses are migrating due to tax-related reasons. Those that migrate to the EU countries, for instance, will enjoy the region’s “Controlled Foreign Company” rules. The other reason that businesses migrate is due to a favorable economic and legal landscape. Malta, for instance, has beneficial Continuation of Companies Regulations that assist in the easy re-domiciliation and continuation of business on migration.
The island nation is also forging a “digital innovation authority” to perform the certification of blockchain companies. The regulator will also design an initial coin offerings framework. Binance, as per Bloomberg, is working with the Maltese government, to bring these efforts to fruition.