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There are over 500 casinos on Native American tribal lands in the United States, plus numerous other businesses that benefit from special regulation in special jurisdictions. Soon, that list of businesses could include startups in the crypto, blockchain, and fintech spaces<\/p>\n
It already does in Rock Hill, South Carolina.<\/p>\n
25 miles south of Charlotte, Rock Hill county is home to just over 100,000 people, including the Catawba Indian Nation<\/span><\/a>. And that nation has just sent up a special economic zone with regulatory certainty for web3, crypto, blockchain, and fintech companies that they might not find anywhere else in the U.S.<\/span><\/p>\n (Photo by Mario Tama\/Getty Images) <\/p>\n Getty Images<\/small> \u201cWhat the Catawba are building is a special economic zone,\u201d the CEO of the Catawba Digital Economic Zone, Joseph McKinney, told me recently on the TechFirst podcast<\/span><\/a>. \u201cA special economic zone is an area within the host government that has different laws or legal codes and regulations that make it attractive for businesses to relocate there. And traditionally that has been done physically, you usually set up an office or some sort of a physical building within that zone. But with the zone that the Catawba are building here, what they need to do is register virtually to set up a company. And by doing that, they get to enjoy the legal codes and regulations of that special economic zone.\u201d<\/span><\/p>\n Think e-Residency in Estonia, for example.<\/span><\/p>\n The benefit, primarily, is regulatory certainty for businesses in cutting-edge industries involving digital assets, which doesn\u2019t exist everywhere in the U.S., never mind the world. Malta has been a major player in crypto and blockchain startups, but that comes with significant challenges in location as well as bureaucracy for U.S. startups. <\/span><\/p>\n What that \u201cregulatory certainty\u201d exactly means isn\u2019t completely clear yet. The Catawba <\/span>voted<\/span><\/a> to establish the digital special economic zone in February, but there\u2019s a lot of work to be done to set up a legislative and operational framework for companies that want to reside in it. One thing it won\u2019t be is a new wild, wild West with no rules and no accountability to existing laws in the U.S. KYC and AML still apply; money-laundered isn\u2019t welcome.<\/span><\/p>\n \u201cUsing a model similar to Estonia\u2019s eResidency, after completing the \u2018know your customer\u2019 (KYC) requirements, anyone in the world will be able to set up an eCorporation online in the GEZ, and take advantage of policies and regulations that allow them to safely manage their digital assets, raise investment capital and offer digital-banking services,\u201d Catawba Corporation, the company owned and controlled by the tribe, says.<\/span><\/p>\n And while many U.S. citizens in crypto have moved to Puerto Rico in search of cryto-friendly tax regimes, this is not a tax play.<\/span><\/p>\n \u201cThis isn\u2019t a tax play,\u201d says McKinney. \u201cThis is a play about regulations and legal codes. And, you know, Puerto Rico, that\u2019s fantastic for that. In fact, this isn\u2019t a competitive project for that, it\u2019s collaborative. Puerto Rico is great for natural persons who are trying to reduce their tax load. So they go and move there for a reduced tax treatment on the federal level. So what we\u2019re actually recommending to people is to move to Puerto Rico but have your business registered within the Catawba special economic zone so you could benefit from the jurisdictional arbitrage, while when you\u2019re in Puerto Rico, you\u2019re benefiting from your personal income and capital gains arbitrage.\u201d<\/p>\n Once fully in operation, the Catawba expect the special economic zone to be lucrative. Thomas Trimnal, a VP at Catawba Corporations, says it will put the drive on the cutting edge, help attract money and investment from global players, not just the U.S., and create more jobs for the tribe.<\/p>\n \u201cThere\u2019s so many places in Asia that people don\u2019t have such favorable climates for this type of situation,\u201d says Trimnal. \u201cAnd this could be a safe harbor for them.\u201d<\/p>\n In addition, Trimnal says, it will be agile.<\/p>\n As the world changes and crypto\/blockchain change, the special economic zone will be able to update its regulations much quicker than a state or country.<\/p>\n To do so, of course, it will need to create and publish those regulations, and then set up a framework for adjusting them over time. <\/p>\n The vision is big:<\/p>\n \u201cIn 7 to 10 years, I want it to at least take a huge chunk out of Delaware\u2019s market for company registration or even to replace it as the gold standard,\u201d Trimnal says. \u201cAnd I think those are all doable goals.\u201d<\/p>\n Subscribe to <\/em>TechFirst<\/em><\/a> here, or get a <\/em>full transcript<\/em><\/a>.<\/em><\/p>\n<\/div>\n
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