Written by Reuben Godfrey, originally published on CoinTelegraph
The Isle of Man could become the Switzerland for Bitcoin as the small island’s government has been quick to react to the growth of digital currencies.
Over the past twenty years the proliferation of the internet has brought about a golden age of gambling. Regulating this rapid growth has been a massive challenge for legislators globally and with the growth of crypto-currencies this task has become a lot harder. So, why are some countries doubling-down while others are leaving the table?
History of bending rules
Few people outside of the British Isles will know much about the Isle of Man. Not quite a nation in its own right, this tiny British ‘protectorate’ has a history of bending the rules which apply to the mainland. For example, the roads have no speed limits so an annual motorbike road race is held there: the infamous Isle of Man TT. This race has grown to become the island’s main source of income. And gambling, although not to everyone’s taste, is still considered a legitimate industry on the island.
The government has been quick to react to the growth of new digital currencies and has enacted changes which make the island very attractive to online gambling and Bitcoin. Virtual currencies are be accepted as if they were cash. Will these attributes create the perfect environment to attract the next wave of gambling supersites to the island?
If the island doesn’t prosper from this revenue stream then it’s conceivable that legal loopholes will be sought in the new legislation and the Isle of Man could become the world’s first crypto-tax-haven. Indeed, anyone who has followed the recent Panama Paper’s revelations will have seen Prime Minister David Cameron squirm when questioned about his proximity to some of the findings – perhaps he likes the idea of having a crypto-Bahamas right on his doorstep?
Examples of small, agile, legislative regions can be found all around the world. In North America there are the First-Nation reservations where, since legislative changes in the late 1980s, casinos are huge revenue generators. They’re not just cash-cows for those running the operations as these native-casinos are subject to a special gambling tax and create revenue for the surrounding state too. Moral conflicts are historically good for business.. remember Al Capone?
Switzerland for Bitcoin
With no international consensus on how crypto-currencies should be regulated, most of the larger online gambling sites have not enabled the option. This has left the door open for smaller, niche sites to test the water.
Erik Vorhees received a lot of attention with Satoshidice but it has never got close to the revenues generated on traditional sites. It seems, for now at least, that those who are willing to gamble their Bitcoin are more likely to be drawn to day trading than to the blackjack table.
While, if not exactly gambling in the strictest definition, the current DAO crowdfunding project is a good example of risk-taking: participants contributing their hard-earned ether to a project whose goals are unclear and have no comparable projects against which to benchmark. A different thrill to those offered with cards and dice.
As Max Keiser said; ‘We only need one country to be the Switzerland for Bitcoin before others will join the revolution.’