The best FinTech investments for 2018 will be offshore banks. International banks are the future of private and protected crypto exchanges, the only mechanism to convert cryptocurrency to FIAT currency, and one of the biggest beneficiaries of the advent of blockchain remittance systems. For these reasons, offshore banks will be the best FinTech investments for 2018.
First a little background. I’ve been in the offshore industry since 2003. I’m the author of the International Tax Guide, which is currently in it’s 9th edition. This book is focused on US tax and business planning for those living and working abroad.
I’ve also licensed and consulted for international banks in Puerto Rico, Dominica, St. Lucia, Panama, St. Kitts, Belize, Japan, and China. I’m the author of the Offshore Bank License Guide, 2017, available on Amazon.
In this capacity, I’ve come to understand that blockchain and cryptocurrency are the future of offshore banking. Here’s why the best FinTech investments for 2018 are established offshore banks moving onto the blockchain.
Established offshore banks have an existing client base, a proven business model, systems and people in place, and demand for their services is increasing. Without cryptocurrency, these businesses are boring but solid investments… investments that will generate a stable and long term return but nothing like the ROIs we see in ICOs.
And the offshore banking industry has a problem. The costs of US and EU compliance are killing their bottom lines. The largest expense for any international bank is KYC, AML, and its compliance department. With US FATCA and EU OECD requirements have made doing business in a tax haven cost prohibitive.
Another problem is that offshore banks can’t attract business clients. They’re relegated to fighting for personal asset protection and money management clients because it’s inefficient to operate a business through an international bank.
The most profitable segment of legacy banks is business accounts. Corporations that send a large number of small wires, payroll remittances, and check processing generate big fees.
Businesses don’t take transactions offshore because the fees are to high. No one is going to pay $100 to send a wire for $1,000 to a merchant. Likewise, it’s impossible to handle cross border payroll through SWIFT because of these fees.
Blockchain technologies will reduce compliance costs and open up the business market to offshore banks. This is why I believe offshore banks will be the best FinTech investments for 2018.
Blockchain platforms like Ripple will allow offshore banks to transmit tokens or FIAT currency over the network at near zero cost. By eliminating SWIFT and legacy banking systems from the equation, the cost to send payroll and transfers between countries will go down dramatically, allowing offshore banks to compete with local banks for business clients.
Moving to an online payment wallet will also allow offshore banks to eliminate or reduce their correspondent banks. These corresponding partners are the bane of the offshore banker’s existence and the sole reason compliance costs are so high.
Blockchain and cryptocurrency will allow banks to hold accounts in FIAT or crypto denominated tokens. Rather than holding US dollars, the customer can hold a bank issued token denominated in US dollars.
As a result, the bank doesn’t need to transact through a US dollar correspondent partner. It can operate within its blockchain wallets and transmit tokens rather than dollars. When it needs to pay in dollars or euros, it will do so through a nostro account rather than a correspondent account.
Adding to the potential of these FinTech investments in 2018 are changes in US tax policy. Both the Senate and House versions of Trump’s tax plan will open up offshore banking and international tax planning for multinationals. They will be incentivised to move some of their transactional business offshore and the demand for well run FinTech banks will increase.
Finally, blockchain systems will open up gray area industries like Marijuana to offshore banks. These businesses need a cashless online option to reduce their exposure and get them into the banking system. For more on this, see: How to Setup an Offshore Bank for the Marijuana Industry.
The key to finding the best FinTech investment offshore is to look for an established bank with a history of compliance. One that’s financially stable and ready to make the move onto the blockchain. The best FinTech investment for 2018 is an international bank with a solid client base and an experienced team of cryptocurrency experts.
I hope you’ve found this article on the best FinTech investments for 2018 to be helpful. For more information, and to be introduced offshore banks that are working towards ICOs, please contact me at email@example.com. Only accredited investors will qualify for these offerings.