Bermuda plans new class of bank to aid blockchain
Bermuda’s government plans to amend the island’s Banking Act to help establish a new class of bank focused on assisting local fintech and blockchain organisations.
The change to the banking laws comes as part of Bermuda’s drive to become a global hub for blockchain and fintech innovation. Its ambitions have been hampered by local banks’ concerns over regulatory issues and potential risks, which makes them reluctant to provide funding to companies in these sectors according to David Burt, who became Bermuda’s premier last July and is also minister of finance.
Introducing the bill, Burt commented: “The fintech industry’s success globally depends on the ability of the businesses operating in this space to enjoy the necessary banking services. In other jurisdictions, banking has been the greatest challenge and for us in Bermuda it is equally so and therefore it must be resolved.”
In April, the premier signed a memorandum of understanding (MoU) with the world’s largest cryptocurrency exchange, Binance, under which the Binance Foundation will provide up to $10 million of university blockchain development and compliance training and invest up to $5 million in Bermuda blockchain companies.
Binance reportedly plans to develop a “global compliance base” in Bermuda, a move which Burt says will create 40 jobs, of which most will go to local workers.
A second MoU, with Shyft network, followed in May. This will reportedly provide $10 million for blockchain technology education and economic development on the island.
Bermuda has also proposed a Virtual Currency Business Act that addresses virtual currency exchanges, wallets, services, and initial coin offerings (ICOs). The bill seeks to support the integration of cryptocurrency and fiat currency and to address market manipulation and fraud.
Last year, Burt created a blockchain task force comprising a regulatory and legal working group to provide an environment supportive of blockchain technology. Bermuda also plans to introduce a nationwide electronic-ID scheme, to eliminate the need for multiple hard copies of ID documents and to allow people to control their own data.
The programme will provide a single aggregation platform for know-your-customer and anti- money laundering (KYC/AML) compliance.