‘Reclaiming Lost Ground’: Government Digital Assets Plan – Finance and Banking
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The Bahamas has “an incredible opportunity to reclaim lost ground and be part of the new frontier of finance,” digital asset specialists said yesterday, as they welcomed the government’s release of its “vision” for the $3 billion industry.
Andrew Rolle, president of the Bahamas Investments and Securities Business Association, told Tribune Business that the policy position unveiled by the Prime Minister in Parliament “is another step in positioning The Bahamas as a global leader in digital assets.”
The ‘white paper’, titled The Future of Digital Assets in the Bahamas, seeks to balance signaling to crypto, blockchain and non-fungible token (NFT) providers that this nation is ‘open for business’ with the risk-based regulatory approach necessary to protect the country’s reputation and the interests of investors/consumers.
Indicating the Bahamas’ eagerness to attract blue-chip operators of the same caliber as FTX Digital Markets, one of the world’s largest cryptocurrency exchanges, who wish to operate in a compliant environment, the document lists several broad objectives and policy goals that the government wishes to achieve in building a sustainable digital asset industry.
Pledging to work with the Central Bank and the private sector to enable Bahamians to invest in digital assets using Bahamian dollars, and thereby overcome a key complaint from many locals, the ‘white paper’ also pledged to create this year a digital policy committee and a digital council. Panel tasked with advising the government on how best to facilitate the growth of the sector through legislative and policy initiatives.
The committee will be headed by the prime minister, tasked with overseeing the delivery of the government’s digital policy objectives, while the group will include industry and regulatory executives operating in a capacity that will see them advising the former.
And, perhaps critically, the “white paper” also aimed to enable Bahamian entrepreneurs and workers to harness the opportunities of digital assets by providing them with the necessary skills upgrades. It calls for a partnership between the University of the Bahamas (UoB), the Securities Commission and the private sector to develop courses, certifications and degrees related to crypto assets.
To help fund this, the government says it is considering whether to impose a “development and training” tax – sum and mechanism unspecified – on “the largest digital asset companies” to ensure that the Bahamas can provide the skilled and well-trained workforce that can help attract other home-based operators to this country.
Philip Davis QC, addressing the House of Assembly on the ‘white paper’, said it was designed both to place the Bahamas ‘at the forefront of this new frontier’ and to boost the economic growth. He added that it could modernize and diversify the country’s long-standing economic model, saying this nation cannot afford to “stand still” following the devastating impact of COVID-19.
“Our vision is to transform the Bahamas into the leading hub for digital assets in the Caribbean and a global leader in progressive business regulation in this deeply innovative space,” the Prime Minister added of the ultimate goal. of the “white paper”.
“Taken together, achieving these goals will encourage the growth of an exciting new industry while protecting consumers, businesses and investors. They will also provide safeguards against systemic risks that may emerge. They will also help promote and championing Bahamian competitiveness and providing new opportunities for Bahamians and international investors.We want our country and people to be seen as innovators, among the first and best as a great place to do business.
Mr Rolle, who has partnered with fellow Bahamian financial services executive Brian Jones to create Agio Digital, a “pioneer” digital asset set to launch soon, told Tribune Business that the “white paper “complements and enhances” the Digital Assets and Registered Exchanges Act – the legislative basis for Bahamian entry into the sector.
“I think this is another step in positioning The Bahamas as a global leader in digital assets,” he added. “I think financial services are going through a major overhaul in terms of service delivery and the emergence of new types of assets, the pace of which is breathtaking and difficult to grasp.”
The release of the government’s policy position, Rolle said, “bodes well for the Bahamas, where we have a sufficiently strong and innovative framework, and where we have established global leaders like FTX.” While the potential benefits to the financial services industry and the broader Bahamian economy cannot be quantified at this time, he added that the digital asset/FinTech (financial technology) space will drive both the entrepreneurial activity and local jobs.
As the Bahamas has spent more than two decades seeking to re-establish a competitive edge in financial services, Rolle said of digital assets, “I think this will absolutely present us with a great opportunity to reclaim lost ground.
“I think with the newness of digital assets and the well thought out but aggressive forward thinking of the Securities Commission, successive administrations and stakeholders such as the Bahamas Financial Services Board (BFSB), I think it’s an incredible opportunity for the Bahamas to reclaim lost ground and be part of the new frontier of finance that the world is watching and trying to find potential opportunities to participate in.”
Valdez Russell, vice president of communications and corporate social responsibility at FTX, told Tribune Business yesterday that he hopes the release of the “white paper” will incentivize rival cryptocurrency exchanges and other providers to digital assets to locate here and do business from this jurisdiction.
“We believe the Government of the Bahamas continues to move in a progressive direction around the digital asset space, and we hope the release of this ‘White Paper’…keeps the Bahamas at the forefront- custodial policies and plans create welcome jurisdiction for other exchanges to do business in the country.
“We hope this will attract more of our colleagues and we hope it will create new opportunities for young and bright Bahamians to contribute to our national economy.” Mr. Russell added that FTX supports the government’s plan to work with the Central Bank to facilitate Bahamian dollar investments in digital assets. This has been a problem for many locals, who have complained about having to go through exchange controls to obtain foreign currency for such investments.
“We have received many requests from Bahamians who wish to participate in the exchange, and we are pleased that they are taking the necessary steps to make this happen, as it creates ownership in the country and allows Bahamians to contribute in a way meaningful,” Mr. Russell added.
Mr Davis yesterday reiterated the government’s intention to “prevent bad actors” with a well-regulated and compliant digital asset industry. “While we recognize the extraordinary opportunities offered by digital assets, we also recognize the risks and therefore underscore the importance of effective regulation. We will attract the best companies and ward off the bad actors,” the Prime Minister added.
“Digital asset companies associated with our jurisdiction must operate fairly and in the interests of customers. We must ensure that customer money and assets are properly protected and that measures are in place to detect and prevent the financial crime. By doing so, at the same time, The Bahamas will meet its international obligations, preserve our reputation and mitigate the inevitable risks associated with the introduction of new technologies.”
The government’s “white paper,” outlining the potential economic benefits for the Bahamas, said the total dollar value of digital assets worldwide had risen from zero in 2008, just before Bitcoin’s launch a year later, to $3 billion in November 2021.
“The government’s approach to digital assets builds on successful examples in other countries, including Gibraltar, Switzerland, Liechtenstein and France. We also looked at current and proposed schemes in places such as the United States, United Kingdom, European Union, Dubai, Singapore, Japan and Australia,” the newspaper said.
“We have sought to formulate a balanced policy that safely encourages innovation and fosters opportunity, while adhering to best practices and rigorous standards while respecting our international obligations… The volatility in the value of crypto assets remains high, and so they are.
“These risks, together with the risks associated with financial crime such as fraud, money laundering and illicit financing, require proportionate and relevant policy responses. Many jurisdictions fail to strike the right balance between, d “on the one hand, effective regulation that is risk-appropriate and appropriate for a new and growing industry and, on the other, to support the growth and economic potential that innovative fintech can bring.”
Originally posted by The Tribune.
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