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ICO legislation set to be tabled next month

The grass is not being allowed to grow under Bermuda's ambitions to be a leading global player in the world of digital currencies and blockchain technology.

Legislation related to ICOs, or initial coin offerings, is in train and is expected to be presented to Parliament next month.

But while there is a sense of urgency, the island is not about to jeopardise its international reputation as a “stellar business jurisdiction”. That's the way Wayne Caines tells it, and he had more than words to demonstrate the seriousness of the Bermuda Government's commitment.

Beneath the shade of a tree the Minister of National Security held a lunch and learn event on the lawn of the Cabinet building where he described Government's plans regarding digital currency and distributed ledger technologies. He was joined by a number of experts in the field, including Aron Dutta and Loretta Joseph.

Mr Dutta is chief executive officer of Vaphr, and formerly a senior partner of Global Blockchain Centre of Competency at IBM.

Ms Joseph is the digital chairwoman of the Australian Digital Currency Commerce Association, and she has extensive experience in financial markets. Significantly, she has written crypto-related regulation for Australia that has subsequently been adopted by 17 countries. She is also a blockchain adviser to the OECD.

Mr Caines said digital assets and blockchain represent a “seismic opportunity” for Bermuda, however he added: “We need to work with all the regulatory bodies in Bermuda to regulate it. We take advice from the leading government agencies and they have given us red flags that we have to be clear on. We understand that, but we also believe this is a phenomenal opportunity for our country to grow, be strong and be leaders in this space.”

Bermuda is preparing for an imminent FATF [Financial Action Task Force] assessment that will look at the effectiveness of the country's anti-money laundering and counter-terrorist financing. With that on the horizon, warning voices have been raised.

“When I talk to my colleagues, they say we have the FATF assessment, how do we make sure Bermuda's international finance reputation is protected? I said I needed somebody that has written legislation for FATF, written legislation for OECD,” Mr Caines said, in a nod to Ms Joseph.

“The biggest challenge is reputation. Bermuda has only one thing it trades on and that is its reputation.”

Mr Caines described the enthusiasm that has been shown towards Bermuda as word has spread about the Government's commitment to be a leading jurisdiction in the crypto and blockchain space. Attending events linked to the World Economic Forum in Davos, Switzerland last month, he and David Burt, the Premier, “could not walk ten feet without someone in this cryptocurrency space saying ‘listen, we have heard what Bermuda is doing, how do we get involved with Bermuda?'”

That led to 12 teams involved in the technologies showing up for a meeting in Bermuda shortly afterwards to see how they could move forward their plans in Bermuda.

Minister Caines was yesterday joined on the lawn by two young crypto entrepreneurs from overseas, one was Joseph Weinberg, who cofounded the company Paycase, a global remittance platform.

The Minister described three key aims, the first being the creation of ICO legislation. He said: “We plan to have this within the next three weeks, with a second reading before April 1.”

After that there will be an innovation lab and a digital asset exchange. He indicated that legislation is being formulated.

A third aim is to create electronic IDs. This is something that has been pioneered by Estonia in Europe. Mr Caines said he has been corresponding with the man who started eID in Estonia.

“He told me there are ten things that they did wrong. He said if you can avoid all of those pitfalls we can be in better stead,” said Mr Caines.

“We want people all over the world to have assets or register companies in Bermuda. No, they are not coming here to work, they are not coming here to take our homes, they're not going to be running around on the buses or taking our pensions.”

He said the Government wants to have a digital asset exchange that is properly regulated. He added: “We don't want the bad actors or nefarious players to come to Bermuda. We have worked too hard to create a reputation for Bermuda as being a stellar business jurisdiction to jeopardise that with cryptocurrencies or distributed ledger technology.

“We know the risk. We see this as a phenomenal opportunity in this space and we are developing a team. Everyone wants to know what is the Bermuda model. We have taken advice from the teams in Estonia, and talked to the teams in Gibraltar and Australia.”

Sunny outlook: Wayne Caines, Minister of National Security, spoke to an audience on the Cabinet lawn about the Bermuda Government's aims regarding digital assets and blockchain. He was joined by a number of experts in the digital fields (Photograph by Scott Neil)

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Published February 22, 2018 at 8:00 am (Updated February 21, 2018 at 11:36 pm)

ICO legislation set to be tabled next month

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