The EU decided to remove Cayman Islands from its blacklist of tax heavens on Tuesday.

The Cayman Islands is a popular jurisdiction for crypto businesses. It was added to the EU’s blacklist in February of this year, so it has spent fewer than six months on the list. In 2019, the six exchanges domiciled there were responsible for over $1.5 billion in international Bitcoin (BTC) transactions.

Though these numbers pale in comparison to the global leader — the Seychelles, whose 12 exchanges were responsible for $36 billion, the Seychelles remain on the blacklist and are categorized as a nation that “does not cooperate with the EU or has not fully implemented its commitments.” One of the major exchanges based on the Seychelles is BitMex, which recently ended up in the hot water with the U.S. government.

According to Allison Nolan, founder of Athena International Management, a company that provides governance solutions to the international investment community, the Cayman Islands provide “robust regulation” with stringent know-your-customer and anti-money laundering controls in place:

Part of the robust framework for the Cayman Islands is the innovative approach to the regulation of virtual assets. So, the Cayman Islands government enacted the Virtual Assets (Service Providers) Law 2020, in May. It provides for the regulation of virtual asset businesses and for the registration and licensing of persons who are providing virtual assets services.

Nolan also emphasized that the local regulators welcome legitimate cryptocurrency business, which she believes helps local businesses:

“The focus here really is very good for the crypto space, because what it’s doing is it’s making sure that there’s an oversight in terms of those providers.”

She also noted that all local regulated businesses are subject to stringent cybersecurity requirements.

The blacklist was created by the European Parliament as a response to the information contained in the Panama and Paradise papers. It is unlikely that the latest FinCen leak has figured into the decision to remove the Cayman Islands from the list (it is mentioned in at least in 652 transactions). The list gets updated semiannually with the next one expected in early 2021.

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