When U.S. entrepreneur Bharath Rao looked around for the best place to raise money for his crypto-currency derivatives trading business, the United States did not make his list. Instead he chose the East African island nation Seychelles to sell the trading platformâ€™s tokens.
Rao, a San Diego-based technology veteran who has worked for major Wall Street banks, is not alone.
Confronted with national regulatorsâ€™ intensifying scrutiny of digital currency fund-raising, known as initial coin offerings, many entrepreneurs are moving businesses to locations more welcoming to crypto-currencies and known for low taxes.
Dozens of start-ups have flocked to Singapore, Switzerland, Eastern Europe and the Caribbean this year, according to interviews with entrepreneurs and company registration data made available to Reuters.
Like bitcoin, the best-known crypto-currency created in 2009, the coins use encryption and a blockchain transaction database enabling fast and anonymous transfer of funds without centralized payment systems.
The numbers compiled by crypto-currency research firm Smith + Crown show how national regulatorsâ€™ attempts to curb coin sales may just shift business elsewhere.
The United States leads with 34 digital currency start-up registrations so far this year, but that reflects Silicon Valleyâ€™s role as a technology hub and the depth of U.S. financial markets rather than a welcoming regulatory climate.
Singapore registered 21 entities, up from one in 2016, followed by 19 in Switzerland, up from three last year, according to Smith + Crown. Central Europe saw 14 companies registered this year, compared with one in 2016 and the Caribbean hosted 10, up from two last year.
â€śThe data affirms our sense that Switzerland and Singapore remain go-to locations, but the U.S. could remain for companies raising large amounts of money,â€ť said Matt Chwierut, Smith + Crownâ€™s research director. -Reuters
Story first published: 28th November 2017