Global tech pioneer praises island’s innovation
Bermuda could develop a thriving “start-up economy” over the next decade with a community of innovators using technology to tackle the world’s challenges in many different sectors.
That is the view of Jeff Pulver, voice over internet protocol pioneer and executive vice-chairman of Skrumble, who believes the island will be rewarded for embracing innovation in a way that few other countries have.
Speaking yesterday at the Liquidity Summit, one of the Bermuda Tech Week events, Mr Pulver praised Bermuda’s efforts to create a regulatory framework for the fintech industry.
“As an innovator I’m so used to being attacked,” Mr Pulver said. “I’m so not used to being embraced. It’s a wonderful feeling to be loved and to come to a place where innovation is being embraced.
“It creates a landscape in which Bermuda could become a home, not only for financial innovation, but for tech start-ups to come here to be understood and to find a home to grow from.”
Mr Pulver has is one of the members of Bermuda’s Global Fintech Advisory Board, described as a body of industry “thought leaders” who can help ensure the Government’s fintech strategy is aligned with the needs of customers, companies and innovators.
In a panel discussion, Mr Pulver and fellow members of the board said fintech start-ups in the US often fell foul of decades-old regulations amid confusion over which rules applied to them.
Bermuda has seized an opportunity by creating a regulatory framework for the industry under the Digital Asset Business Act.
“What I love about Bermuda is that they and a few other countries had the balls to come forward and say, ‘this is what we want to do’ and listen to feedback from the community on how to do it,” Mr Pulver said.
Blockchain was the “most overhyped technology in human history” and yet few understood its potential well, he said, adding that it would be the driving force of the fourth industrial revolution.
“The idea of building ecosystems with immutable trust is the big thing, the foundation for change,” he said.
It was quite possible that the US would pass its own digital securities act within the next decade, which could attract innovators back. Even then, Bermuda could continue to play a role in fostering innovation “out of the box”, Mr Pulver said.
Maintaining an innovation-friendly environment could attract the smartest minds to Bermuda, as a place providing the foundation to attract “capital for people to dream”.
“I would like to think that ten years from now, there could be an amazing start-up economy built on all sectors, not just confined to two or three, but that it could be great in 38 sectors,” Mr Pulver said.
Blockchain’s potential went far beyond cryptocurrencies and has barely been tapped yet, he added, and finding ways to describe its capabilities in plain language was key to further development.
“We’ve seen people swindle and misbehave, but we haven’t taken the higher side of what good we can do,” Mr Pulver said.
“We have to talk about the rebranding of this space. If we could throw out all the old terminology and create terminology that was consumer friendly so people could relate, there would be many more people involved in this.”
Grant Fondo, a partner at US firm Goodwin Law, where he is chairman of the Blockchain and Digital Currency Group, said: “There are a lot of companies very concerned about coming to the US. It’s a patchwork of regulations and enforcement, so it’s very difficult for companies to operate there.
“Where Bermuda can fit in is that it’s more nimble and building more organically, whereas the US has an existing regulatory framework in which it’s trying to jam in digital assets.
“People want a regulated environment and Bermuda has a unique opportunity here.”
Creating that environment was likely to reap rewards for the island over time, Mr Fondo added.
“Over the next three years, Bermuda could be a [regulatory] sandbox for the world in digital assets,” Mr Fondo said.
“It can be an innovative hub for smaller companies, who can use Bermuda as a launching pad. Over ten years, I think it won’t be just a launching pad, it will be where those companies want to end up.”
Bruce Fenton, founder and chief executive officer of Chainstone Labs, saw the digital securitisation potential of blockchain as a major driver of economic growth over the next decade.
“In ten years, there could be millions of securities,” he said. “You may wish to invest in your favourite local restaurant, but it’s very difficult to do because of legal and regulatory barriers. You may not want to invest $50,000, but $100. You go to a lawyer and ask for that — it’s not worth doing.”
Distributed ledger technology made such small-scale investments possible, potentially unleashing a massive new capital source for small, as well as large business around the world.
“It’s definitely going to happen, and that’s great, because it’s all about sharing risk and that’s what the foundation of economics is all about,” Mr Fenton said. “It will be great for entrepreneurs and for growth and for capital formation.
“If Bermuda can be a piece of that in breaking down barriers to make this happen, that could be really exciting for the country.”
Barbara Jones, another lawyer from Greenberg Traurig’s Los Angeles office, where she co-chairs a blockchain and cryptocurrency practice group of more than 80 lawyers, said Bermuda had a leg-up over others who have jumped into the blockchain space, because it has a background as a leader in financial services spanning decades.
“Bermuda has an opportunity to make its mark in this industry and set the bar for much of the rest of the world,” Ms Jones said.
Many governments were stuck in the 19th century when it came to innovation, while Bermuda was trying to harness it, she added.
The next three to five years would be critical in getting over the “humps” around digital assets across the world in terms of attitudes and regulations, Ms Jones said. Financial institutions were playing catch-up in modifying their business models to keep up with developments like peer-to-peer asset transfers.
“We know that the G7 has a task force looking at developing a digital reserve currency,” she added, a key development to monitor.
Wayne Smith, head of the Government’s FinTech Business Unit, said the Premier had a vision for a paperless government. Putting government services on blockchain, together with everyone’s personal data, would reduce the need for filling out forms, saving people’s time and improving efficiency, he said.
Forty to 50 cents of every dollar spent on healthcare in the US went on administration, meaning blockchain had the potential to slash healthcare costs worldwide.
He said that the Global Fintech Advisory Board was due to stage its second meeting last night, having first met on August 21.
He promised some “exciting announcements” from the Government during Tech Week.
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