Bermuda is the most recent jurisdiction to express a desire to be at the forefront of cryptocurrency legislation. It is presently planning to create a comprehensive and extensive crypto-regulatory framework.
Bermuda’s government is pressing ahead with its ambitious aspirations to become a cryptocurrency powerhouse. According to Bermuda’s Minister of Industry and Labor Jason Hayward, the small island state known for its stunning pink sand beaches and favorable taxation rules has been actively building its crypto-sector since 2017.
In an interview with the Wall Street Journal (WSJ), Hayward cited the economy’s and local regulators’ experience dealing with foreign companies as a crucial component in Bermuda’s ability to become a crypto-hub.
“We are aware of the recent devaluation in the price of cryptocurrencies and remain confident that it does not threaten the island’s ability to become a crypto hub. This industry downturn is likely to advance our goal and positively impact our long-term growth and role in this sector.”
Bermuda building up a strong industry?
Bermuda, as one of the countries that has chosen to embrace digital assets, could become a leader in the decentralized finance arena. Because of the regulatory uncertainty, many businesses have second-guessed their decision to offer digital payment options. Bermuda might quickly become a crypto-center if this is taken care of.
Hayward does not see the recent drop in the crypto-market to be an intrinsically negative event. This, he believes, may even help the island’s ambition of becoming a digital asset center.
According to Crag Swan, the BMA’s Chief Executive, the Bermuda Monetary Authority (BMA) has issued a total of 14 licenses for crypto-businesses to operate out of the British island territory. Four of those were approved in 2022.
Swan stressed, however, that the BMA is not aiming to accept anyone who wants to open a crypto-hub in Bermuda. The BMA is prioritizing quality over the number of its crypto-hub goals.
Licensing process in 3 stages
According to Hayward, Bermuda’s licensing process is divided into three stages: a testing license, a modified license, and finally a fully approved operational license. The testing phase usually lasts three to twelve months, but the BMA hasn’t said how long it will take to get a full license.
Bermuda’s bid to entice crypto-businesses comes as many crypto-companies believe that regulatory uncertainty remains a barrier to the industry’s wider adoption and development. The crypto-industry in the United States currently lacks major governance and investor protections. President Biden had issued an executive order in March requesting government agencies to investigate digital currencies.
Bermuda’s desire to promote itself as a crypto-hub is unsurprising to observers. Bermuda is leading the way in developing an infrastructure for the crypt- business, according to David Schwartz, head of the Financial & International Business Association. It is doing so by passing a comprehensive framework for regulating digital assets and improving its anti-money-laundering procedures.
Other potential roadblocks to crypto’s growth in Bermuda include the industry’s lack of understanding of the anti-money-laundering standards required for a license. Also, banks and insurers’ reluctance to take on crypto-firms as clients.
The BMA has responded by providing online training for service providers to help them understand the regulator’s anti-money laundering expectations. According to Mr. Swan, more banks and insurers are now accepting crypto-startups as clients.