Australia's CoinJar moves HQ to UK for 'progressive' bitcoin scene
Australian bitcoin startup CoinJar has followed Atlassian's lead, moving its headquarters to London in an expansion bid that will see it tap into the country's financial sector.
On December 1, the bitcoin startup revealed that it had relocated its headquarters to London's Docklands region as it embarks on the next stage of its growth strategy by incorporating as a UK company.
"We're excited to be part of the progressive digital currency scene in London, and we know we can play an important role in this market," said CoinJar CEO and co-founder Asher Tan.
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Tan said that from December 1, CoinJar customers would no longer get slugged with Australia's 10 percent Goods and Services Tax (GST) when buying or selling bitcoin, under the country's current tax treatment of virtual currencies.
However, CoinJar's move to the UK has been more about its growth strategy than avoiding Australia's taxation system, according to Tan, who relocated to London last month.
"My co-founder [Ryan Zhou] and I felt the UK was most welcoming for our business," Tan told ZDNet. "The legislation has been one of the factors — there have been no added levies, such as VAT to bitcoin in the UK — but from really early on, we knew if we wanted to make a global product, we couldn't just service Australian users. We wanted to be competitive globally.
"We spent some time in California, in the Silicon Valley tech scene. While it is still the Mecca for startups and tech, in terms of financial technology, the UK is on a par. And at the same time, the UK has been more open to investigating these new technologies," he said.
The UK shift follows a similar move by Australian-founded tech giant Atlassian, which relocated its corporate headquarters to the UK earlier this year for better tax treatment, and to expedite its expansion prospects.
Like Atlassian, CoinJar — which received an AU$500,000 investment round from Australian venture capital firm Blackbird Ventures late last year — is leaving some of its staff members in Melbourne, while the company's HQ settles into its new home at financial technology accelerator Level 39, in London's Canary Wharf.
Tan said that the move would see CoinJar begin hiring new talent in the UK, including top developers, to grow its European operation with the launch of a new platform early next year, while the company expects to continue fully servicing its existing customer base.
"We're limited by what sort of banking and financial framework there is in a market," he said. "We hope to launch a new platform early next year, which will be for UK customers as well as existing customers in Australia."
Tan said that new European customers will effectively be on the same platform as its existing customers, but in the background, there will be different connections to various banking networks, depending on the customers' local markets.
The company, which trialled its CoinJar Swipe bitcoin Eftpos card system in September, claims over 32,000 customers and more than AU$50 million worth of transactions to date.
However, Tan acknowledges that his company is competing in a niche market that is rapidly becoming populated with emerging rivals — a major consideration in the UK move.
"Everything is happening right now, but we need to take a proactive step," he said. "We are competing on a global scale, there are well-funded American startups and UK companies. To be a global leader in this space, we’re not going to sit back; we're taking a lead on this."
The move follows the first of several hearings of an inquiry by the Australian Senate Economics References Committee into an appropriate framework for digital currencies.
The Senate Committee was told on November 26 that the ATO's decision to treat bitcoin and other cryptocurrencies as a commodity for tax purposes is likely to hamper the emerging digital currency sector and force businesses overseas.
"It could result in driving the digital currency businesses that [are] emerging in the sector offshore and potentially underground," said Ronald Tucker, the chairman of the Australian Digital Currency Commerce Association (ADCCA), at the hearing.
In August, the Australian Taxation Office (ATO) released its guidance on digital currencies such as bitcoin, treating them as barter for individuals transacting less than AU$10,000 worth, but as a commodity for anything over that amount, or for businesses.
This decision leaves businesses and high-value bitcoin transactions open to the GST for both buyers and sellers, while individuals using bitcoin as an investment may be subject to capital gains tax rules when they dispose of it, as they would for share assets.
At present, Her Majesty's Revenue and Customs in the UK exempts digital currency trading from value added tax (VAT), meaning new and existing CoinJar customers will not be levied any additional taxes when they trade.