Mar 17
Investing in the Blockchain Economy
Increasing economic development in regional areas is vexing public policy makers globally. Meanwhile, a growing number of cities, states and nations are proactively pursuing blockchain policy, organisations and startups to cement themselves into the crypto economy.
The Swiss city of Lugano recently announced the launch of a public, private partnership called Plan B with crypto stablecoin firm, Tether and well known crypto Layer 2 project Polygon. The partnership is making up to 100M Swiss francs (CHF) available for attracting blockchain organisations to Lugano and up to 3M Swiss francs to help companies integrate crypto into their businesses. Moreover, following approval from the Swiss financial regulator, Lugano is planning to allow Bitcoin and Tether to be used for the payment of a number of city taxes including
parking fines, sewage and cemetery taxes, issuance of passports, access to cultural and leisure amenities and market stall fees.
Meanwhile, more than 11,000 kilometres away, the tiny island nation of Palau, is using a different blockchain attraction strategy to diversify and unshackle their economy from an over-reliance on tourism.
The Palau Ministry of Finance have launched a digital residency program that allows individuals, for a fee, to launch businesses, sign documents and open local bank accounts. Palau are conducting their Know Your Customer (KYC) checks using an online platform and issuing the digital residencies in a technology partnership with US firm Cryptic Labs.
So far, the program has generated $71,000 USD from 700 people who have joined their e-residency program since Feb 2nd.
About 40% of Palau’s digital resident applicants were from the US, 30% from Europe, and another 30% from Asia, including China
Returning to Europe, we discover another nation, Estonia, whom have been running a national e-residency program since 2014. The program allows people to set up and manage a “location independent” company online and establish bank accounts. According to their website, the program has 84,000 e -residents and 16,000 e-resident companies that has generated by our calculations, at least $13.84M USD in fees for the Estonian government.
Across the Atlantic to the US state of Colorado, we find governor Jared Polis declaring that he plans to make the payment of state taxes and fees possible with crypto.
“There will be a transactional layer there, so the state will ultimately receive the payments in US dollars, but we want to provide more convenience and flexiblity for our citizens” Governor Jared Polis
Although Governor Polis is stopping short of holding crypto as part of his government's treasury, the question might be asked how far are some US government representatives willing to go with crypto?
Visiting one end of the spectrum, we find people such as Republican Senator Wendy Rogers who has recently introduced 3 crypto bills into the Arizona State Senate. The first bill 1341 is moving that Bitcoin be accepted as legal tender in Arizona. A position that is likely to conflict with the US Constitution that prohibits the states from entering into any
Treaty, Alliance, or ….coin money
Undaunted, Senator Roger’s next bill 1128 moves that all virtual currencies be exempt from Arizona personal property taxation and a third bill 1127, legislating for the payment of state fines, taxes, rents, rates and fees to be possible with cryptocurrency.
Not to be outdone, Washington Congresswoman Suzan DelBene and Arizona Congressman David Schweikert have introduced cryptocurrency legislation advocating for the removal of income tax obligations for cryptocurrency payments under $300. In their cross-hairs, is the requirement for people to report an appreciation (or depreciation) in the value of their cryptocurrency, eg Bitcoin, from the time purchased to the moment of the transaction where it is expended eg to purchase a cup of coffee.
Another US state in pursuit of the blockchain economy is Boston, home of well known blockchain layer 1 Algorand and stablecoin organisation Circle (USDC). Firms, who recently partnered with the Boston Business Journal to survey 343 executives about their blockchain knowledge.
75% of the Boston executives surveyed said that were very familiar or somewhat familiar with blockchain technology.
82% of Boston executives surveyed, agreed with the statement “Blockchain technology will eventually achieve mainstream adoption.”
Leaving the US and returning to Europe, we also find that Spain is serious about blockchain, including growing and incubating startups and investment via their Blockchain Hub Spain (BHS).
The BHS program assists blockchain founders to validate their business idea, connect with mentors and design & deliver a winning pitch deck to secure equity finance.
Returning to our article start point, Switzerland, we find one of the world's best known blockchain hubs located in the town of Zug, south of Zurich and is colourfully named “Crypto Valley”.
According to our information,
Zug’s Crypto Valley has more than 842 blockchain related companies that employ 4,400 staff and have played a seminal role in the formation of leading blockchain organisations like Ethereum, Polkadot and startup Aleph Zero.
Supporting this vibrant ecosystem, the nearby University of Zurich’s Blockchain Centre is led by no less than 22 professors who study, lecture and work on blockchain topics.
Progress, that may leave other jurisdictions who are at the beginning of their blockchain journey hesitant about how to commence.
Your Blockchain Attraction Strategy
Your region’s Blockchain Attraction Strategy (BAS) could begin with a blockchain growth audit to identify the natural strengths characteristic to your region that align with the blockchain economy.
For example do you have a
-vibrant technology startups sector?
-record of innovation with government customer service?
-university with academics who are motivated by blockchain learning?
-reliable high speed internet?
-track record or desire to compete and win at attracting blockchain firms?
-commitment to improving community financial and blockchain literacy?
-desire to involve your community in blockchain training opportunities?
-curious and confident leadership who are willing to pilot new approaches?
