The Carolinas are about to be at the epicenter of major changes in governance in the Digital Age and the Financial Technology industry. Leading those changes as a shining example is the Catawba Indian Nation of North Carolina and South Carolina. They have created a way to circumvent many of the obstacles that burden or block entrepreneurs and companies, e.g. mandatory costs and regulations. In a swiftly changing world, governments tend to have a quality of getting in the way of growth. The Catawba’s objective is to not only work with companies to escape government clutches helping to drive an economy forward but also to provide a better example of good governance in a new era.
Overcoming the real obstacles of government permits, licensing, regulations, tariffs, and more has been an ongoing struggle for entrepreneurs and companies. Whether those be startups or businesses that want to create a more competitive market but are burdened by various state and federal costs. Paving the way for a future of online governance in a new world of Web 3.0, the Catawba Indian Nation has successfully started what will be a historical moment in the frontier of digital governance. This is the first Digital Economic Zone in the United States.
What is a Digital Economic Zone? Also known as a DEZ, it is a new form of Special Economic Zone where businesses are granted relief from permits, licensing, regulations, etc.., so long as the business is incorporated within the zone. More so, a Digital Economic Zone is not restricted to the location in which it conducts business. This is because the zone is accessed online, as opposed to traditional SEZs which are set to specific physical locations. Although the DEZ does have physical locations, users can register based on jurisdiction of those locations remotely.
There are nearly 7000 SEZs worldwide, and that number is expected to grow. The United Nations have long lauded SEZs for stimulating significant economic growth for the poorest of nations. These physical zones significantly improve local and surrounding areas’ standard of living while encouraging copious foreign direct investment. Traditional SEZs have aided billions of people out of extreme poverty, including in such countries as China, India, and Indonesia. The quick success story of Shenzhen, China, as an SEZ example is that it helped at least 218 million people escape extreme poverty within the first 20 years alone.
Zone Chief Executive Officer, Joseph McKinney, is extremely optimistic about the long-term growth and opportunities from this. In a recent interview, McKinney exclaimed, “The CDEZ is saving the Carolinas and it is saving the US! This is going to provide opportunities for people all over the world to pursue entrepreneurship or to save their company significant costs. This is like a ’51st date’ compared to incorporating in Delaware.”
Although North Carolina and South Carolina have seen some positive major financial technology legislation changes over the past few years there are still strict limitations. Those limitations are especially burdensome for burgeoning markets like that of financial technology, also known as FinTech. Exhaustive lists of bureaucratic red tape hamper the exponentially evolving market. So, a DEZ will help alleviate many of those burdens, allowing for the market to better flourish.
Carolina FinTech Hub Executive Director, Tariq Bokhari, ushered in to create a more welcoming environment for entrepreneurs in FinTech in the Carolinas. He has helped North Carolina become an Innovation Sandbox state when it comes to FinTech entrepreneurs. This sandbox approach provides some limited workaround for budding companies, which is a fantastic step forward for NC. Researchers have predicted FinTech across the US will have a compound annual growth rate of around 26%. Bokhari believes North Carolina is not only one of the largest Gen-Z magnets for FinTech, but also that with these reduced regulations NC is going to get a large piece of that market.
“All boats rise in the state when we have programs like this and less regulation,” stated Bokhari. When asked about the CDEZ, he maintained, “It’s def[initely] something people are paying attention to and wondering how it’s going to turn out.”
What sets the Catawba DEZ apart, besides being accessible online and having established legal definitions while saving significant amounts of capital, is that it is in a recognized, sovereign, Native American, a nation within North and South Carolina. This means the Catawba Digital Economic Zone, or simply CDEZ, is securely outside many of the stricter regulations and limitations of the respective states, yet it is still local enough to create a positive impact in NC and SC. More businesses will naturally begin to incorporate within the digital zone. In turn, this will drive more investment to the CDEZ, exponentially improving local markets and the standard of living. Of course, this is not a way to get preferential federal tax benefits, and it is not a means of avoiding regulations or governance altogether.
Another unique difference between the CDEZ versus Delaware and other FinTech, cryptocurrency, NFT, etc., incorporating entities is that the CDEZ goes through the strict entry. With such background checks and accountable transparency as Know Your Customer (KYC) and Anti Money Laundering (AML) to avoid black markets. The CDEZ utilizes a best-in-class, open-source, legal system known as ULEX, and is comprised of an advisory board of experienced professionals in the field. The CDEZ not only relies on their governance and that of ULEX, but also on the government of the Catawba Indian Nation. This is to say, that the CDEZ is not without rules or checks and balances. It is secure and they intend to compete for long-term wins.
Historically, when Native American tribes have found ways to work within the state and US federal laws and had stable success, the respective states tend to follow suit setting up programs similar to that of the Natives. In other countries, when zones have been successful, the countries tend to replicate the zone or copy the laws. The CDEZ is going to help those that wish to eCorporate within the zone, along with the Carolinas in general. As state laws are already beginning to favor innovators and entrepreneurs, the Catawba Digital Economic Zone will help launch the FinTech industry and states even further once it picks up enough momentum. Once it is, there are sincere hopes in the industry that more digital economic zones will emerge.
