Interactive DIGITAL CURRENCIES
Designated Business (Registration and Oversight) Bill 2014 will not obtain a financial services licence but they will be registered to conduct des- ignated business.
Will banks on the Isle of Man take business from these new start-up businesses involved with digi- tal currencies? Interested companies should approach local banks to discuss their specific requirements.
Can existing businesses accept payments now in digital currencies? Companies need to take their own advice on this matter. What is vital to the Isle of Man is that the consumer is protected at all times.
Is VAT chargeable on the Isle of Man on payments made with digital currencies? The IOM is in a customs union with the UK and therefore the UK rules apply in respect of VAT. The UK has already ruled that the activities of mining a digital currency, exchanging it or charg-
Gaming companies are moving towards faster less costly payment environments, and
digtial currencies offer the same service, but without the potential for charge-backs. Operators
recognise that this is the way things should be moving.
ing for related transactions will not be subject to VAT. This is in line with Article 135(1)(d) of the EU VAT Directive.
What would the benefits be to the Isle of Man economy of accepting these businesses? The Isle of Man recognises innovation in the Financial Services and e-Business sectors and is therefore keen to welcome legitimate Digital Currency businesses provided that they adhere to appropriate controls. These businesses will bring jobs and income to the Island and create enhanced career opportunities.
Would any placement of digital currencies into an exchange registered on the Isle of Man be protect- ed as it is with a deposit in a bank?
No, the placement of Digital Currency into an exchange is not a deposit, and the deposit protec- tion scheme does not apply. Therefore, consumer discretion should be exercised due to the risk of loss or failure of the businesses.
Will minimum standards be set for the security systems that these exchanges implement? No, but as international standards are developing this may be added into any regime in the future.
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What are the IOM’s goals in allowing operators to offer digital currencies to their players? We ultimately need to protect the customer and keep crime out of the island. Our job is to make sure the Anti-Money Laundering Directive is fully implemented, we adhere to anti-terrorism legis- lation, and then we need to look at individuals and businesses themselves, ensuring they are correctly run and the rules are fully implemented.
Users of digital currency on the sites of IOM licensed operators will have been through KYC checks (Know Your Customer), and will then have the option to use digital currencies as they would any other currency on the site.
The ability of players to transfer money from one location to another without incurring banking charges and currency exchange penalties is highly appealing, but there are also risks...
There is a case for buyer beware with digital cur- rency, in regards to how the value of the currency might change with a fluctuation in the price from one gaming period to the next. With elements like this, terms and conditions have to be made com- pletly clear to players from the outset.
Why be a first-mover in offering digital currencies to players?
We want to attract high quality businesses and allow those companies to grow in a controlled manner. Yes, we are one of the first movers in this area, and so it is vital that it be done in a con- trolled manner. We have numerous companies
talking to us already and there’s been a lot of interest, both from gaming and non-gaming com- panies.
What are the benefits to the operators of offering digital currencies to players? Gaming companies are moving towards faster less costly payment environments, and digtial curren- cies offer the same service, but without the potential for charge-backs. Operators recognise that as a service for players, a value transfer that is both instantaneous and almost free is the way things should be moving.
How long will it before before operators are able to implement digital currencies with an IOM licence?
At present we are undertaking a consultation period with the industry on the island, as they are very able and willing to participate in that process. We are also being approached by other jurisdictions looking at digital currency adoption, but for the most part, the processes will take those jurisdictions a long time to come into force. Bigger jurisdictions have lots of things in the way, whereas here on the Isle of Man, we can pull the right people together quickly and have taken the necessary steps already.
Will players be more vulnerable if using digital currencies? I would expect that using digital currencies with a licensed operator on IOM, players will be in exactly the same position as with any other pay- ment option. However, outside of gaming, that is something that they need to look to themselves.
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