Crypto Valley Summit, a two-day conference aimed at launching the Isle of Man as a prime location for bitcoin businesses, kicked off today in the wake of news that threatened to undermine its central goal.
Just one day before the conference of more than 200 attendees began, a firm providing banking facilities to bitcoin businesses on the island announced it would close those accounts under pressure from its partner banks.
Still, the event was opened resiliently by the Isle of Man's Lieutenant Governor, Adam Wood, who extolled the island's ability to take advantage of a rising interest in digital currencies.
"The rapid development of digital currencies is leaving legislators and regulators playing catch-up. This is where the Isle of Man's small size works to its advantage. It's agile and we can make an appropriate response in record time."
A panel on banking garnered the most attention, as R Paul Davis, the most visible digital currency proponent on the island, decried the banks' decision to cut ties with domestic bitcoin businesses.
Davis addressed the crowd and this most recent news head on, saying:
"HSBC closed CTS' corporate accounts because it objected to bitcoin transactions flowing through it."
Davis went on to state that banks like Barclays were invited to speak at the event, but demurred following "national discussions". Davis also announced that a merchant services firm based in the US called Instabill would pick up the slack from CTS' account closures.
"[Instabill] would be able to fairly quickly replace everything CTS is offering with the exception of UK Faster Payments. I have warned [Instabill's CEO] that his only real danger is being killed in the rush."
Davis also offered his predictions on which banks would recognise the opportunity in digital currencies, and which would fall behind, asserting that Spanish megabank Santander would be first to capitalise on cryptocurrency given its exposure to Latin American markets where remittances and online payments are in demand.
He said banks like HSBC and Barclays, which have faced recent sanctions from regulators, would be last.
The regulatory panel, which included David Hodgson, deputy director for authorisations at the island's financial regulator, the Financial Supervision Commission, was largely positive on the development of digital currencies on the island.
"My view is that where the Isle of Man government has decided to place itself, bringing in the AML [anti-money laundering] regulations is appropriate," Hodgson said, referring to the island's requirement that digital currency firms have to register with the FSC for AML oversight.
John Spellman, the island's director of financial services, likened digital currencies at present to earlier payment systems, which met with initial resistance before widespread adoption.
Drawing comparison to debit cards, Spellman said:
"The idea of validating yourself with a PIN was bizarre. I see digital currencies as being in the same place."
Gaming and crowdfunding
Simon Dixon, of Bank to the Future, talked up the Isle of Man's potential to become a prime location for bitcoin firms on a panel he shared with Max Keiser, host of the television programme The Keiser Report.
Dixon threw jabs at London and rival offshore jurisdiction Jersey:
"This is the ideal jurisdiction to disrupt the [banking] market. The jurisdiction that will win is not London [... and] despite the fact that Jersey reactionarily came along after the Isle of Man, it is a banking island, I think there will be a lot of politics involved with a new form of finance."
The Isle of Man has a large online gambling industry, comprising about 10% of its gross domestic product. Firms like online poker giant Pokerstars are based on the island.
Panellists on the session on gaming and cryptocurrencies welcomed the greater adoption of digital currency globally, with one panellist noting that cryptocurrencies could potentially offer greater profit margins to gaming operators.
On the sidelines, investor Brock Pierce, who is a co-founder of Isle of Man-based GoCoin, was effusive in his praise for the event.
Pierce's remarks captured the optimism of the event:
"It's so refreshing hearing from government officials and regulators who are positive about digital currencies. The Isle of Man is the centre of the bitcoin universe now."
Featured image of Isle of Man Lieutenant Governor Adam Wood via Crypto Valley Summit