Only a few months after it took to Malta, Binance started cozying up to Jersey, one of the Crown Dependencies that comprise the Channel Islands between the UK and France.
“We have chosen Jersey to be the next big step in our global expansion strategy for its clear and pro-crypto investment and regulatory environment. With its local economy based on a major currency (GBP), and its close proximity to the UK and Western Europe, we are confident the cooperation with Jersey will not only benefit the local economy, but also form a strong operational foundation for our expansion into the rest of Europe,” CEO Zhao Changpeng said.
Those are some rather vague words, but nonetheless, it’s quite easy to break down why Jersey Island would be attractive for Binance. First of all, since the 1950s, the island has been a destination for wealthy businesses that wanted to benefit from the privacy that it offers to their accounts.
The nation not only lacks an inheritance tax—which was one of the first things that people took advantage of—but also has highly-favorable tax conditions for businesses that want to set up their financial accounts there. It’s not tax-free, however, for financial services companies. Binance will have to pay a 10-percent tax on its income. One could argue that it’s still a favorable chunk of its income compared to what it would have to face elsewhere in Europe.
Binance’s move to Malta may have had the same motivations—aside from the fact that the country has enacted reforms to make it more blockchain-friendly—due to its complete exclusion of taxes on foreign-earned income. Of course, the other motivation—which Changpeng hinted at in his statement—would be that Binance would be able to offer GBP pairs, much like how its move to Malta allowed it the ability to do the same with the Euro.
OKEx may have had the same motivations behind its move to Malta, proving one simple truth: If you want to attract massive cryptocurrency operators into your country, you must have a favorable fiat currency, offer strong financial privacy, and be relatively light on taxation.