Special Economic Zones for Crypto, From China to Switzerland
Recently, Russia revealed the intention to build a financial center in Bolshoy Ussuriysky, an island claimed by the country. This major financial center would cater to crypto, and it isn’t the first of its kind. Other countries have been busy developing these special zones for crypto and blockchain.
Switzerland has Zug and is planning crypto regulations. Georgia has two offshore zones with Gori and Tbilisi with them being developed as a crypto hub and planned regulation. China and the Philippines are also part of the list of countries developing special economic zones.
The Russian island lies where the Ussuri and Amur rivers merge and is on the border of Russia and China. It was a territory with a long history of disputes between the two governments, and in 2004 it was officially divided.
After a flood in 2013, the Russian part of the island has been abandoned with very little infrastructure in place, including the lack of paved roads. Other proposals have been made to develop this area, but none have moved forward.
Acceptance of blockchain and the use of crypto has received mixed reactions in Russia. The country’s largest bank announced that it was stopping the initiative to develop services related to crypto. The hope of creating a special zone on the island is to attract new businesses.
Switzerland was one of the leaders in developing special economic zones for crypto with Zug. This small town has a population of about 30,000 and is known as Crypto Valley. Back in 2016, residents were able to pay fees in bitcoin. The goal of the city was to stand out front of technology, according to the city’s mayor. Even though the move had no practical impact and was more symbolic in nature, it did lead several tech companies to move to the city. Zug was ranked as the community with the fastest growth in Europe according to a Fintech Study.
Another area at the front of crypto safe zones is the Philippines. In 2018, an announcement was made about a fintech hub which would become the Asian version of Silicon Valley. The corporation which developed this plan was the Cagayan Special Economic Zone (CEZA). The goal for this city is to provide more jobs in technology for residents and to provide stimulus for the local economy.
As many as 25 tech companies have already promised participation with licenses already being issued to cryptocurrency exchanges. At the same time, there is a renewed focus on developing rules governing this currency and its implementation.
Georgia is well on its way in the crypto economic zone with as much as 15 percent of electricity devoted to crypto mining. There is no regulation in the country at this time for crypto. The plan has been for low regulation which is blockchain friendly.
China is another leader in developing a special economic zone. However, crypto is missing from much of the plan. The government instead focuses on the growth of its own technology. Blockchain would be used in certain areas and incentives are being offered to tech companies who use blockchain.
High-Tech Park is the name of the safe zone in Belarus. The government officially recognizes companies that work with blockchain and has moved them to HTP. Mining and exchanges are not considered business activities, which means they are not taxed. Companies do not need to declare income from crypto operations until 2023. Even with these benefits, the economic safe zone hasn’t developed to the point it was expected.