[Test-C31-5395] Why It's Time to Pay Attention to Mexico's Booming Crypto Market

The Takeaway:

• Out of a list of 26 crypto exchanges domiciled in the Republic of Seychelles, approximately half have poor know-your-customer (KYC) procedures, according to blockchain tracking firm CipherTrace.
• Analysis of certain Seychelles-based exchanges reveals the proportion of funds flowing to and from “high risk” sources and dark marketplaces.
• In an interview with CoinDesk, the Seychelles Financial Services Authority acknowledged that the U.S. crackdown on crypto derivatives exchange BitMEX in October was a “blowup” for the island.
• A former FinCEN compliance and enforcement director expects more actions from authorities investigating the Seychelles jurisdiction.
• This is the first part of a two-part series. Read the second part here.

When it comes to island-hopping crypto exchanges with relaxed know-your-customer (KYC) procedures, Seychelles-domiciled BitMEX, whose senior execs were issued with arrest warrants in October, could be just the tip of the iceberg.

Places like the Republic of Seychelles, an archipelago off the coast of East Africa (population: 96,762), can be attractive to firms because of favorable tax treatment and ease of governance when setting up foundations.

Many such jurisdictions are trying to reinvent themselves to adapt to new economic realities. Perhaps they want to be the next fintech or crypto hub and are experimenting with sandboxes and the like. Of course, some aspiring crypto centers may be more cautious than others. This often depends on the type of services already provided. Malta, for instance, already caters to a number of investment firms, while a jurisdiction like Luxembourg has a well-established financial services sector.