Bankers confident new entrant has been fully vetted
Bermuda’s existing banking fraternity appear set to welcome the island’s fifth bank into the Bermuda Bankers Association, the trade organisation for the industry.
A spokesman for the BBA confirmed that its members – Bermuda’s existing banks - have themselves, also been looking at digital transformation, especially as a result of the pandemic.
There have been discussions about the new entrant, including with the Jewel executive team, as any full banking licensee is eligible to join the BBA.
The spokesman expressed confidence the new group has been fully vetted by the Bermuda Monetary Authority, confident that the BMA “applied both rigor and diligence to this analysis”.
Meanwhile, Chancellor Barnett, founder, chairman and chief strategy officer of Jewel Bank, confirmed that it took significant effort to prepare for the licence application, and prepare for the bank’s launch.
“Bermuda is a special place,” he said, “in that you have a well-regarded, well-accepted and well-liked regulatory framework that creates clarity in digital assets, and a single sophisticated regulator that is open for business; and is a bit more collaborative and accessible than you might find in other jurisdictions.”
Jewel Bank is Bermuda's first new bank in over twenty years and first digital asset bank.
Jewel's services address the core banking, payments, and settlement needs of many of the world's largest global digital asset firms and exchanges.
Now fully-licensed, Jewel Bank will also service digital asset firms (B2B) around the world in any non-sanctioned jurisdiction, as well as the US.
With the recent meteoric growth and volatility in digital asset trading, volumes reached $2.1 Trillion on spot exchanges alone in May of 2021, with an estimated 90 per cent of this volume taking place on exchanges outside of the US.
But Jewel says the non-US digital asset firms driving these trading volumes are underserved with respect to digital asset banking and payments services.
Stable banking services represent a key risk and pain point for market participants, as fiat on/off ramps facilitated by banks are the lifeblood of their growth and profits in trading.
Jewel Bank's primary focus is serving the needs of non-US domiciled or licensed firms.
The bank will also plan to offer domestic retail banking services in Bermuda and help accelerate Bermuda's digital transformation.
At a critical time in the stablecoin market where certainty and true stability is needed with respect to stablecoins, Jewel Bank says it has innovated by being the direct issuer of fully reserved one-to-one fiat-backed stablecoins issued against fiat deposits and regulated as a full bank.
A press statement said: “This is a superior structure to many of today's stablecoin structures by non-bank issuers.
“Jewel Bank will issue a USD stablecoin, and later plans other single fiat currencies, issuing its own stablecoins and also issuing stablecoins "as-a-service" for other banks and non-bank financial institutions who need Jewel's stack of regulatory, technology, and compliance capabilities.
“US regulators recently stated their desire for banks and depository institutions (banks) to be the issuers of stablecoins, as per the November US President's Working Group Stablecoin Report.
“Jewel Bank's first use case for its USD stablecoin is for Jewel Settle - its own real time settlement network that enables select Jewel clients to settle with their digital asset trading counterparties in USD, 24/7, in real time.
“In contrast, settling USD/fiat payments over traditional bank wires can take 2-4 days to settle out on a crypto trade that takes just a few minutes.”
Mr Barnett said: "Institutional banking infrastructure has been the critical missing link for high growth digital asset exchanges and institutions outside of the US, bringing much-needed liquidity, reliability, and scale to this rapidly growing global space and its demand for fiat ramps and stablecoin payments.
"Jewel Bank will serve as the bridge between the traditional fiat banking system and new digital asset rails in order to serve the high-volume payments and settlement needs of our large global clients, including crypto exchanges, with both traditional and stablecoin-based payments solutions."
The statement said: “Jewel leadership chose Bermuda as the optimal non-US jurisdiction for its global digital asset bank due to Bermuda's existing DABA digital assets framework under a single regulatory body (unlike the US), the sophistication of the Bermuda Monetary Authority regulator and Bermuda's top global standing in compliance and anti-money laundering and counter-terrorist financing measures.
“Likewise, Bermuda's prior commitment to accept single USD fiat-backed stablecoins for payment of taxes and government services, Bermuda's history as a leading global financial services centre in reinsurance and insurance, and the support and innovation from the top levels of leadership in Bermuda, including its driving force, Premier David Burt, were all key factors in the decision to domicile in the country.”
Premier Burt said, "The granting of a full banking license by the BMA to Jewel Bank is a tremendous achievement both for Jewel Bank and Bermuda. I am incredibly honored that Jewel Bank chose Bermuda as their home and am pleased to finally be able to say that Bermuda has a complete banking solution for the digital asset industry.
“Jewel Bank's vision for stablecoins aligns well with our desire to support and embrace fully backed private sector stablecoin issuers. We look forward to working closely with Jewel Bank to help our Bermuda regulated industry achieve much needed banking support."