“Bitcoin Paradise” Isle of Man Introduces Regulation, Unlikely to Impress

Last year, Isle of Man held much promise of becoming the highly sought “Bitcoin paradise”, a standing which a number of other islands subsequently became candidates for.

Authorities pledged support for the industry even when discussing anti-money laundering (AML) measures. They expressed an openness to accepting bitcoin for tax payments, and a number of free professional services for Bitcoin startups sprung up.

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But as they also promised, regulation was necessary, and on its way. Effective April 1, all digital currency businesses will have to comply with anti-money laundering regulations. The Proceeds of Crime Order has been amended to now include digital currencies. It now applies to businesses involved in:

“issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including crypto-currencies or similar concepts where the concept is accepted by persons as a means of payment for goods or services, a unit of account, a store of value or a commodity.”

Furthermore, businesses will have to employ know-your-customer (KYC) measures and report suspected money laundering behavior to authorities. The rules contrast sharply with previous comments stating that bitcoin transmission doesn’t need a license, although those engaging in it do so at their own risk.

The industry is likely to be disappointed by the measures and consider them to be far too burdensome, similar to the initial reaction on the BitLicense proposal.