A small Crown Dependency that is part of the United Kingdom in the Irish Sea with a population of just 85,000 is not by accident a focus of the economy in areas such as cryptocurrency, blockchain and FinTech. The simple fact is that before the crisis of 2008, services such as banking, insurance and investment funds, were responsible for providing up to 40% of the GDP of the Island’s economy. The financial crisis forced a rethink about the diversification of the economy. The Government has placed its faith on the e-gaming business, which now brings the Island some 17.5% of its GDP, and the resources it receives have been reinvested in the financial and technical infrastructure. Telecoms on the Island are at a global standard (the Island was the second jurisdiction in the world after Japan to introduce 3G, which was then introduced to Britain and across Europe), with this Dependency of the UK building massive data centres.
The Island produces all its electricity from its own gas supply resources, and exports the remainder to Britain. This chosen strategy has stimulated not only the e-gaming business, but also the banking industry. And then arrival of FinTech companies, since for them the economic environment of the Island looked very attractive from a development perspective. The inflow of FinTech companies to the Island began three years ago with interest by cryptocurrency players. The dynamic growth of this sector even drove a winning name for the Island as “Bitcoin Island.”
To weed out any “bad players” and to protect the interests of businesses and their clients, in 2014 the Government created a Regulatory environment, aimed at combatting money laundering. This involves transparent financial regulation, rigid standards and requirements for crypto business activities, and tough sanctions for those who violate them. The Island’s Authorities have made it clear that there is no place for criminals. The Island’s Authorities liaise with organizations investigating international violations as well as collaborating with the tax and legislative institutions of different jurisdictions. The Isle of Man has signed a number of Treaties and Agreements with the EU and Brussels regarding the blocking of money laundering.
Giving the green light for electronic currencies in 2013, by 2015 the Government focused its attention on the technology related to Bitcoin – blockchain. This technology, which has become the aspiration of many, encouraged the inflow of specialized companies to the Island. As Brian Donegan, the Head of Digital Operations and the Development of e-business in the Department of Economic Development of the Isle of Man, stated, the enthusiasm for Bitcoin has been replaced by enthusiasm for blockchain. And from the Isle of Man Government’s point of view, blockchain has been less controversial, in as much as many of those people and companies are now working with distributed ledger technology.
Today the Island created a cluster of blockchain technology and development companies that create “huge opportunities” for the Island’s economy, because such projects create new jobs, increase the expertise of the Island in IT, as well as creating opportunities for partnership in joint blockchain projects. The Government is implementing a joint project with the Credits company, which is building blockchain ecosystems in the context of public-private collaboration. The company is building a Crypto registry of the companies operating on the Island. It is believed that this experience will lead to involvement in blockchain through the project by other areas of the public sector.
Another public-private blockchain initiative is that associated with the Internet of Things (IoT), which involves the creation of a safe environment for the functioning of “smart homes”, where thermostats, cameras, video calls, door locks, and lighting, are fully controlled. In this case, blockchain technology provides security for the IoT environment. Thus, while many are only looking at such innovative technologies, the Isle of Man Government is actively testing them in order to subsequently to capitalise on its experience as a centre of high-quality R & D.
Before the crisis of 2008, services such as banking, insurance and investment funds, were responsible for providing up to 40% of the GDP of the Isle of Man’s economy.
chief-in-editor at “Future” magazine
Brian Donegan: “The key principle of a successful digital economy should be wide availability…”
The Isle of Man is a small island between Ireland and England with a population of 85,000 people. The financial services industry has been The Isle of Man’s main industry for the last 30 years. Government decided to diversify into digital business about 15 years ago. Recently the Isle of Man launched the Digital Inclusion Strategy 2016-2021. Being online can also help to address wider social issues and support economic growth, Brian Donegan, head of operations for digital development and e-business at the Department of Economic Development, explained when interviewed at the Blockchain money conference in London
Brian, could you explain what is the Digital Inclusion Strategy 2016-2021 about?
Brian Donegan: This strategy brings together partners in the public, private and voluntary sectors to help people get online. It’s part of the Government’s Digital Strategy, which aims to bring more services online and help more people to access them in a coordinated and sustainable way. Helping more people to get online can help them benefit from access to training and jobs, social and leisure activities and to access internet shopping. Being online can also help to address wider social issues and support economic growth.
Which values cashless | digital economy should be based on and to bring for the society?
B.D: I think it’s about availability as we start bringing more of our services online, a good example of which is payments. We have the technology and capability to streamline the efficient management and payment of money online across government services.
Which principles could be considered as essentials for cashless economy development?
B.D.: Talking about the cashless society, we also have to talk about one of the key principles that does not get mentioned very often, which is crime. And so, one of the things that I think is critical in that context is how, wherever you are located can you keep crime out in order to protect the consumer. So, they are the key principles that we adopt from a regulatory perspective.
And also what is very important and describes what we do well on the Isle of Man, is flexibility. We recognise opportunities, and are sufficiently nimble to accelerate the process and capture opportunities. We’ve seen this in the past with e-gaming, we’re now seeing it with digital currencies and blockchain, whereby we’ve moved quickly to put appropriate, relevant regulation in place to exploit the opportunity but at the same time mitigate risk.
Brian Donegan is head of e-business operations, Fintech, and digital development for the Isle of Man Government’s Department of Economic Development. With over 20 years’ of international experience with leading companies in the telecoms, Fintech and communications marketplace, he is a notable senior figure within the community and has led a number of pioneering, tech-focused initiatives in the Isle of Man. To name a few, these include; the early adoption of blockchain infrastructure, the introduction of innovative regulatory framework for digital currency and positioning standards, core principles and codes of practice for the sector, and the growth of the blockchain business cluster via personal advocacy based on unique fiscal and technological propositions. Brian is well-versed in the subject of blockchain, distributed applications (Dapps) and distributed consensus ledgers, having written and spoken extensively on the topics.