The great American tax haven: why the super-rich love South Dakota

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Late last year, as the Chinese government prepared to enact tough new tax rules, the billionaire Sun Hongbin quietly transferred $4.5bn worth of shares in his Chinese real estate firm to a company on a street corner in Sioux Falls, South Dakota, one of the least populated and least known states in the US. Sioux Falls is a pleasant city of 180,000 people, situated where the Big Sioux River tumbles off a red granite cliff. It has some decent bars downtown, and a charming array of sculptures dotting the streets, but there doesn’t seem to be much to attract a Chinese multi-billionaire. It’s a town that even few Americans have been to.

The money of the world’s mega-wealthy, though, is heading there in ever-larger volumes. In the past decade, hundreds of billions of dollars have poured out of traditional offshore jurisdictions such as Switzerland and Jersey, and into a small number of American states: Delaware, Nevada, Wyoming – and, above all, South Dakota. “To some, South Dakota is a ‘fly-over’ state,” the chief justice of the state’s supreme court said in a speech to the legislature in January. “While many people may find a way to ‘fly over’ South Dakota, somehow their dollars find a way to land here.”

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The tiny nations plotting to become tax havens for cryptocurrency

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Success could transform these territories into cryptocurrency tax havens and safe spaces, and models for smaller economies of the future.

Payday won’t be the same next year for the soccer players of Gibraltar United, a team in the premier division of the sport’s league in the British overseas territory. Only a part of their salary will hit their bank accounts, and the rest will come to them in the form of cryptocurrencies. But the soccer team is no outlier there. Nor is Gibraltar unique — it’s among a growing set of tiny territories betting on cryptocurrencies as economic weapons of the future.

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