Sunshine and low taxes: why crypto companies are moving to Miami

"Mayor Suarez has a vision for Miami to be a place that allows for fintechs and crypto firms to thrive."

So says Brett Harrison, president of FTX.US. He is talking about Francis Suarez, the Republican mayor who has publicly positioned Miami as a hub for crypto firms.

FTX.US was among the vast array of crypto companies, investors, advocates, and more that poured into Miami's palm tree-lined streets last week for one of the largest conferences in bitcoin's history. The company, which recently secured the naming rights to the Miami Heat's arena in downtown Miami, is also in the process of securing space for a base in Miami, Harrison told The Block in an interview. 

FTX.US is just one of a number of crypto companies making their new U.S. home in Miami. Some of the higher-profile examples include crypto options exchange LedgerX, London-based crypto unicorn Blockchain.com, and crypto trading firm eToro. 

The Block caught up with representatives from several of these companies last week during the Bitcoin conference in Miami to discuss their rationales for relocating there.

What's driving the exodus?

It starts with Mayor Suarez. The 43-year-old rising political star made headlines earlier this year with a glitzy campaign to woo tech startups. Naturally, he kicked it off with a tweet asking: "How can I help?"

Since then, Suarez has proposed a number of policy proposals — including accepting taxes and paying city employees in bitcoin — in a bid to make it a crypto hub. 

Still, given that these proposals have uncertain paths to being enacted, some industry executives appear more interested in the mayor's crypto-friendly stance than his proposed crypto policies. "We're genuinely excited to be somewhere that wants to support crypto," Peter Smith, CEO of Blockchain.com, told The Block. 

"They're really happy to have you there .... whereas, well, how would you describe New York's feeling towards people in crypto?" another industry executive said. New York's regulatory environment toward crypto companies — firms must acquire a special license to operate in the state — has long drawn the ire of many in the industry

LedgerX's Zach Dexter agreed that much of the decision for the firm to move to Miami was more emotional than practical. "There's no immediate regulatory impact," he said. "Everyone wants to be where the action is. We had such a concentration in New York and San Francisco — it's good that's changing."

To an extent, Covid-19 and the associated lockdowns have inspired companies to rethink their strategies around office space. While LedgerX is legally based in Miami, it doesn't actually maintain any offices there. 

It's not all about the good vibes, though. Even if Suarez doesn't get any of his crypto policies implemented, there are still financial incentives in place. Unlike New York and California, where many crypto firms are based, Florida doesn't impose an income tax.

"If you're coming from a state like New York, it's a huge savings," a source in the tax industry said. 

The Sunshine State also offers the opportunity for these companies to take advantage of a so-called tax abatement deal. Under such a deal, they could avoid paying property taxes on an office building for a substantial amount of time. It's something Blockchain.com is currently exploring, according to Smith. 

Indeed, the prospect of saving potentially hundreds of thousands or even millions of dollars through such deals is a major factor behind the Miami migration. "The first thing that comes to mind with Florida: taxes," the tax industry source.

Ultimately, though, the Suarez factor can't be understated.

"Mayor Suarez played a huge role in this as he single-handedly convinced many of the first movers and A-list firms that now call Miami their home," said Felix Hartmann, a crypto hedge funder based in the city told The Block. "Now commanding both capital, talent, lax regulations, and no state taxes, there is little reason why one would not move to Miami."