(The Royal Gazette) -- Bermuda is preparing a welcome mat for companies and innovators involved in blockchain and cryptocurrency technologies.
With a number of countries around the world jockeying for position in the hope of being among the lead jurisdictions for distributed ledger technology and cryptocurrencies — Bermuda is “moving quickly and aggressively” to lay out its stall.
A task force comprising two teams has been created by the Bermuda Government to develop and put in place strategies for the island.
And a self-governing cryptocurrency association is to be formed, which will have a code of conduct for Bermudian-based token issuers, including measures to ensure enhanced business transparency, and meet Know Your Customer and anti-money laundering requirements.
David Burt announced the initiatives yesterday and revealed that, following meetings in New York, a cryptocurrency trader is to establish a physical presence on the island.
In addition, the Premier introduced Aron Dutta, recently senior partner of the Global Blockchain Centre of Compliance at IBM, and a former head of thought leadership and strategy on fintech at Cisco.
Mr Dutta is the founder of Vaphr Inc, which is involved in creating, funding and building business models that use technologies including blockchain, cryptology, and artificial intelligence. He is also founder of Ambika Group, which is in the process of incorporating its global blockchain platform in Bermuda.
Mr Dutta said Bermuda has huge growth potential in the area of blockchain and cryptocurrencies. Citing the island’s “robust compliance regime”, regulatory environment and legal system, he added: “In our assessment, Bermuda will become a centre for a technological and economic transformation especially in the areas of fintech, medtech, and edtech leveraging the potential of the country’s current and future human capital.”
Possibly by as soon as January or February, the Government aims to have legislation in place to regulate firms operating in or from Bermuda that use digital ledger technologies “to store or transmit value belonging to others, such as virtual currency exchanges, coins and securitised tokens”.
The task of creating a regulatory framework for DLT enterprises to set up and operate in or from Bermuda will be directed by Wayne Caines, Minister of National Security, who has taken on responsibility for government’s ICT Policy and Innovation.
The project task force has been split into two teams, one focused on business development, the other on legal and regulatory matters. Those involved in the task force include government technical officers, representatives from the Bermuda Business Development Agency, and legal and industry specialists in fintech.
Mr Burt said: “The challenge will be in figuring out how Bermuda can set-up an industry that ensures cryptocurrencies are well-regulated, is a safe environment for cryptocurrency firms to grow, whilst also ensuring that this new regulatory environment protects both consumers and the reputation of the jurisdiction with specific attention being given the our anti-money laundering and antiterrorist financing obligations.”
The Ministry of Finance and the Bermuda Monetary Authority are working on a document that will confirm that utility tokens are not a security as long as there is no promise of future value.
“This will allow companies from all over the world to set up in Bermuda for crowdfunding,” said Mr Burt.
The taskforce’s legal and regulatory working group will also confirm that utility tokens are not prohibited or contravening any local legislation.
Mr Burt said: “Bermuda is committed to building upon its position as an innovative international business centre and is considering a complementary regulatory framework covering the promotion and sale of utility tokens, aligned with the DLT framework.”
He added: “Bermuda is a significant option for blockchain and cryptocurrency-related businesses. We are expeditiously developing rules that ensure cryptocurrencies and related tokens are well-regulated, [that there] is a safe environment for those firms to grow, whilst also ensuring that this new regulatory environment protects both consumers and the reputation of the jurisdiction.”
Bermuda is no stranger to the wider world of cryptocurrencies. At the beginning of this month the e-sports company Unikrn Bermuda Ltd launched its sports betting token Unikoin. And in 2007 Bermudian-headquartered Hub Culture launched Ven, the world’s first digital currency.
Speaking in June, Stan Stalnaker, founder of Hub Culture, said: “Bermuda is an ideal location to lead the global trillion-dollar market for digital currency. Bermuda has a chance to be 100 times bigger than it is, financially.
“There is a race on to see which jurisdictions will dominate the largest new asset class in a generation.”