Noble Bank International of San Juan, Puerto Rico, is looking for a buyer as its value has tanked, according to Bloomberg.
Citing a source with knowledge of the matter, the report says that the firm could sell for as little as $5 million at the moment as some of its biggest customers have left. It can be argued that this change in fortune can be attributed to the general fall in the value of cryptocurrency.
Noble Bank Loses Bitfinex
Noble Bank International is a full-reserve bank that provides trading services to the foreign exchange and cryptocurrency markets. It benefitted from the influx of cryptocurrency business to Puerto Rico last year, as prices shot up and the island recovered from a devastating natural disaster.
For example, in May, British Virgin Islands-based Bitcoin exchange Bitfinex opened a bank account with it. One of the most popular exchanges in the world, Bitfinex has attracted controversy – it is strongly linked to the dollar-backed cryptocurrency Tether, which some argue to be involved in market manipulation. The exchange has also been accused of opening shell companies in Poland in connection with Columbian drug cartels.
Reportedly, both Tether and Bitfinex have since left the bank, which is no longer profitable.
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According to Bloomberg, international financial entities located in Puerto Rico held $191 million in 2016 and $3.3 billion by the end of 2017 – a seventeen-fold increase.
This could be attributed to Puerto Rico’s unique political situation – citizens of the Caribbean island are also citizens of the United States, but the island is not a state, so it has no vote within that government, which nonetheless has full jurisdiction over the territory. It has a population of approximately 3.4 million, although around 200,000 had moved to Florida by the end of 2017 as a result of damage caused by Hurricane Maria.
As regards US financial law, companies in Puerto Rico do have to report suspicious activity to US authorities, but accounts owned by foreign citizens can remain anonymous if the money is held offshore. In addition to this, the lack of federal personal income tax, capital gains tax, and a low rate of business tax has drawn tens of American entrepreneurs to the island.
In March 2018, the territory’s Department of Economic Development and Trade established the ‘Blockchain Advisory Council‘, populated by a selection representative of both private and public interests, to filter projects for legitimacy.
However, over 2018 the value of the cryptocurrency market has dropped drastically, and the amount of money held by international financial entities in Puerto Rico dropped to $2.6 billion by July 2018.
Reportedly, Noble Bank International could sell for as little as $5 million at the moment – and that value is attributed to the fact that it holds a licence to operate in Puerto Rico.