Facebook’s crypto a positive indication’
Facebook’s soon-to-launch global cryptocurrency has no link to Bermuda, however it is a positive indication that fintech and digital currencies are the future.
That’s the view of Denis Pitcher, chief fintech advisor to the Premier, who is among many in Bermuda following the development that was announced last week.
Facebook aims to launch its cryptocurrency, called Libra, next year. The organisation that will operate the Libra blockchain will be headquartered in Geneva.
Mr Pitcher said: “While it is disappointing that Facebook and the Libra Association chose Switzerland over Bermuda as their domicile, it is a positive indication that the industry is developing and that there is opportunity on the table if we can seize it.
“We’ve seen interest from players like Circle, which is backed by Goldman Sachs and led by a veteran team of tech industry luminaries, which has an existing 100 per cent USD-backed digital currency and is looking to set up on island and provide access to their currency and portfolio of services.”
When Facebook announced Libra, and its digital wallet Calibra, the news was greeted as a positive for Bermuda’s own ambitions in the digital asset and fintech space.
Libra is seen as potentially introducing two billion internet users to digital currency at a time when Bermuda is establishing itself in the world of digital assets.
Stan Stalnaker, chief strategy officer at Bermudian-based Hub Culture, which created the world’s first digital currency, Ven, and Chris Garrod, head of fintech at Conyers, last week spoke of positives they saw from Facebook’s entry into cryptocurrency.
Mr Pitcher shared that sentiment and said: “Facebook launching a cryptocurrency is a positive indication that fintech and digital currencies are the future.
“At this stage there are still many unknowns with the key question being how Facebook and the consortium of top players they’ve put together will tackle the compliance and banking challenges hampering industry growth.
“Although the consortium contains top players like Uber, Visa, Mastercard, eBay, bookings.com and others, it doesn’t appear that any banks are involved.
“These have been the biggest hurdles to the development of this industry so it will be interesting to see how it develops.”
He said it showcased the evolution of digital currencies and the positive role Bermuda has to play in the space.
Libra will be fully-backed by a basket of global currencies and other assets with the aim of giving stability to its day-to-day value. It is being built on blockchain technology.
Mr Pitcher said: “It represents the latest move of traditional players embracing this new technology and looking for ways to augment traditional finance rather than wholly try to replace it.
“Libra represents the gradual maturing of the crypto and digital currency industries and a progression to apply the underlying technology to reduce the cost of finance and make it more accessible.”
He said it would challenge bitcoin and other cryptocurrencies to provide more efficient means of sending money between countries than traditional wire transfers.
Mr Pitcher added: “How applicable Libra will be in the scale of larger every day payments remains to be seen given the challenges of it being backed by a basket of currencies which can cause it to fluctuate in value relative to local currencies.”
He said the digital currency showed a growing acceptance that blockchain and distributed ledger technology powering cryptocurrencies has application.
“It also shows the challenges faced with regards to compliance that will drive a bifurcation between digital currencies that are designed to be regulatory compliant and to fit within our existing financial infrastructure and the crypto currencies that are designed to circumvent regulations and reinvent our financial infrastructure,” Mr Pitcher said.
In addition, Mr Pitcher emphasised how Bermuda has established itself as “a high standard jurisdiction that is attractive to players looking to launch similar products and evolve the role that technology can play in lowering the cost of finance”.
He said: “We’re keen to attract businesses that want to adhere to the core principles of our risk management regulatory framework protecting against compliance, custody and cybersecurity risks. Bermuda’s key opportunity in this space is to continue establishing ourselves as a key player in the regulatory compliant side of the industry’s growth and development.”