Are They Dublin Their Money?

Headline:  Why are cryptocurrency firms moving to Dublin?

Body: I remember one time there was a very famous bank robber.  After having been caught, he was asked, “So, why did you decide to rob banks?”   He looked disdainfully at the detective, “Cause, that’s where the money is.”  I suspect that this is why cryptocurrency firms are moving to Dublin.   But, maybe the crypto bros are huge James Joyce fans?   Let’s look at this.

What is going on?

Crypto exchange Gemini has selected Dublin as the headquarters for its European operations, amid a backdrop of crypto companies seeking expansion outside of the United States. Leaders of Gemini, the Winklevoss twins, confirmed this information recently.   When asked why, they cited a good pool of talent and a supportive regulatory system.  And, Gemini is not alone; Both Kraken and Binance have initiated activities there, apparently in response to passage of Markets in Crypto Assets (MICA) regulation within the EU.

Many have asked why this movement is happening.   According to the Winklevoss twins (key officials within Gemini) this is due to the amorphous, yet hostile regulatory environment in the States.   (In various interviews, the Winklevoss twins kept referring to the “war on crypto” within the US. Within Ireland, Gemini is registered as a Virtual Asset Service Provider and it is regulated under MICA.

Why Ireland?

“It’s beautiful and they don’t serve haggis, isn’t that enough?”  This was ostensibly exclaimed by the mayor of Dublin.  The  leaders of Gemini were less motivated by the lack of haggis and more motivated by the deep pool of talent and a community  ready to support their enterprise.  Per the Gemini leaders, Ireland will serve as a great entry point to the EU.

Key to this community is the Central Bank of Ireland Inovation Hub.  In this organization, different fintech firms can immediately discuss innovations with the Central Bank.   This ensures that there are fewer surprises for all parties involved, in the future.  This is somewhat akin to a program used by the IRS.   To head off the reasons for an audit in the future, the IRS  can become pro-active.   (These companies have to be BIG, think defense contractors and the like.)  The IRS will install an office within that company for a certain period of time, and if company personnel are considering a new kind of transaction, they can get an informed opinion on how it is going to be taxed.  In this manner, the need for very expensive audits can be diminished.  The Innovation Hub seems to act in a similar manner.

“What I would say is we are in a very different monetary policy and interest rate environment and, as we know from other discussions, I think our sense from talking to firms, is that there are some changes in the sort of investment and investor appetite for these types of firms as well,” she said. “We’ll be looking out for that this year”.

The Verdict

I don’t  feel good about Gemini’s chances and I’ll tell you why.   First, Mr. Winklevoss keeps referring to the “war on crypto” and yet, he does not define what he means or how he is going to engage.    This is not the outlook of a long-lasting champion in business or any other field. Second, Mr. Winklevoss is quoted as saying that he foresees a “Cambrian explosion of innovation.”  This seems to me overblown.   In my humble experience, Mr. Winklevoss might benefit from a reminder of how many species in this evolutionary period, are now extinct.

REFERENCES

Crypto firm Gemini picks Ireland as European base amid US crypto blues (cointelegraph.com)

Gemini Will Base European Operations in Dublin, Ireland (cryptopotato.com)

Binance News on Binance Feed: Crypto Firm Gemini Picks Ireland As European Base Amid US Crypto Blues | Binance Feed

Cryptocurrency firms still engaging with Central Bank despite downturn – The Irish Times

Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.