Despite shrunken crypto prices compared to this time last year, Binance is betting there's still a market for new crypto exchanges. Its new exchange, Binance Jersey, officially went live today, January 16. It will offer four fiat-crypto trading pairs: bitcoin or Ether to the British pound or euro.
Jersey, located between England and France, is a crown dependency, meaning it is not part of the United Kingdom or its territories such as Bermuda and the British Virgin Islands. While the island is self-governing, the UK is responsible for its defense, which may free up capital and factor into its low corporate and individual taxes. Indeed, the standard tax rate for regulated financial services companies is 10 percent (for most other companies it is 0 percent).
Beyond low taxes, there are likely other attractive aspects about Jersey from Binance's perspective. As early as September 2015, the government of Jersey created virtual currency regulations and legally defined virtual currencies as currency. The existing anti-money laundering (AML) and counter-terrorist financing (CTF) laws were also expanded to cover virtual currency exchanges. Exchanges with a turnover above £150,000 per year must register with the Jersey Financial Services Commission (JFSC) and comply with AML/CTF laws.
The government could have done more to regulate the nascent cryptocurrency industry, but after consulting with outside parties, decided instead to apply minimal regulations to avoid stifling innovation. The then-assistant chief minister for financial services, digital, competition, and innovation, Philip Ozouf, wrote of the 2015 regulations:
"[W]e think this is a good starting point where Jersey can be the chosen location to both allow existing virtual currency business to innovate and grow while attracting new business to our shores."
Binance's move to establish a Jersey exchange has been in the works for some time. In June 2018, Digital Jersey, "a government-backed economic development agency and industry association dedicated to the growth of the digital sector," signed a memorandum of understanding with Binance. In it, the company agreed to set up a compliant exchange and work with the agency to "deliver training and other initiatives to support the growing blockchain ecosystem in Jersey."