New Report Shows Seychelles’ Dominance in Crypto Transaction Outflows Author: Jimmy AkiLast Updated: 15 July 2020 The Republic of Seychelles has become one area of murky business transactions over the years, with its tax benefits providing a haven for businesses of all kinds. The crypto industry has been no different, with a number of them basing their operations in the island nation.Fear of the RegulatorsHowever, a new report is shedding light on crypto transfers in the country. Published by blockchain firm Crystal Blockchain, the report groups cross-border Bitcoin transactions based on their countries of origin, and it found that the Republic of Seychelles remains dominant in the industry.In the report, analysts explained that they considered direct, exchange-to-exchange transactions. The categorization also depended significantly on the transactions’ countries of incorporation. Crystal Blockchain explained that the classifications are essential in measuring compliance with the Travel Rule from the Financial Action Task Force (FATF).As the report shows, Crystal Blockchain discovered some interesting discrepancies between the flow of funds across borders and the countries hosting cryptocurrencies. For instance, while the United Kingdom hosts the largest number of registered exchanges (with 50 of those in total), the vast majority of Bitcoin transfers originated from Seychelles.Crystal Blockchain chalked this up to the prevalence of some of the world’s largest exchanges in Seychelles. These include derivatives giant BitMEX, Huobi, and Binance. Crystal Blockchain also found that about 45 percent of Bitcoin transfer volumes came from countries in the G20, with some of them being the world’s largest economies. By contrast, 31 percent of the global transfer volumes in the first half of 2020 were covered by Seychelles.In general, the country has gained more of the global concentrated transfer volumes since last year. Crystal Blockchain explained that many exchanges have had to move their bases out of G20 countries in the past year, with many of them fearing implementation of legislation such as the Travel Rule and the European Union’s Fifth Anti-Money Laundering Directive (AMLD5).Could Seychelles be the Last Great Haven?However, it’s also worth noting that many of these exchanges are losing out on the chance to corner most institutional players. 2020 has seen a significant influx of institutional crypto investors, and as Crystal Blockchain notes, most of them would instead trade on fully compliant exchanges than any other.With regulators across the world pandering to regulations like the FATF’s Travel Rule and AMLD5, tax havens like Seychelles could play a significant role in somewhat preserving the sovereignty of exchanges moving forward.It is especially important now, as some of these tax havens are starting to cave too. In April, the Cayman Islands’ legislative assembly gazetted five separate legislation that covered crypto businesses — particularly, exchanges.A draft of the country’s Virtual Asset Service Provider Bill will establish definitions and the registration requirements for companies providing access to crypto services. The bill includes several provisions, including the sandbox license, which will allow companies working on “risky” technologies to register for one-year permits to test their models.“The proposed framework incorporates relevant anti-money laundering, countering the financing of terrorism and counter proliferation financing (AML/CFT/CPF) recommendations adopted in 2019 by the Financial Action Task Force (FATF),” a press announcement accompanying the legislation explained.