In today’s opening session of Bermuda Virtual Tech Summit 2021, David Burt, the Premier, discussed the launch of a $100,000 stimulus token programme designed to familiarise the community with cryptocurrency.

He spoke with Forbes associate editor Michael del Castillo in a presentation called From Tall Ships to Digital Assets: Bermuda's Journey to Becoming a Blockchain Nation.

“We are trying to get it to a place where we can take money to put inside a stimulus token to give to a thousand persons,” Mr Burt said. “We will give them each $100, and there are 50 places where they can go and spend this $100. We will use that in our economic empowerment zones. That is going to allow retailers to start to accept local-based Bermuda dollar stablecoins.”

A stablecoin is a digital currency pegged to a “stable” reserve asset such as the US dollar or gold. The idea is to reduce volatility relative to unpegged cryptocurrencies such as Bitcoin.

The hope is to launch the token next month, starting at the Bermuda College. Students there would be able to use the token to buy things from vendors on campus or from vendors in Bermuda’s economic empowerment zones.

“That will allow persons to understand how this technology works and then to spend it,” Mr Burt said.

The idea is also to get Bermuda College students interested in cryptocurrency.

Mr Burt said that he had hoped to already have the token launched by now but the pandemic threw a wrench into things.

The token is part of a wider strategy to encourage local adoption of cryptocurrency in Bermuda.

He said that one way of driving local adoption of cryptocurrency was to learn lessons from the insurance industry.

“The insurance industry itself was persons who came into Bermuda, brought capital, built on the Bermuda platform and through no fault of their own became incredibly wealthy and successful,” he said.

But he did not want to see people starting up in the digital asset space having to pay billions just to get in on the ground floor.

To make things easier, the Government recently launched a third category of licence targeting smaller business owners.

“We found that companies who may have been small found it difficult to meet that level of getting to the sandbox licence due to the fact that our regulator is very rigorous,” Mr Burt said.

“So we have introduced a test licence. The test licence is accessible. It costs $1,000. It allows persons to get into a new line at the BMA to build products and services. We can have locals developing applications that can work and be regulated under the BMA framework. They can test them out, and if they do a little better they can graduate to a higher licensing frame.”

Mr Burt said that it is important to let more people get in on the ground floor.

During the discussion, Mr del Castillo asked Mr Burt if there were any plans to legalise Bitcoin, in the way that El Salvador has recently done.

“I don’t think there is any need to make Bitcoin legal tender,” Mr Burt said. “I think that may have been more of a PR thing than something in reality. At the end of the day this is all about flows of money and how you can transact money inside of the economy.”

He also said there were no plans to launch a central bank-backed digital currency.

“The Government of Bermuda has stated that any company that is regulated by the BMA, that issues a one-to-one, fully backed, fully reserved stablecoin, whether it be US dollar or Bermuda dollar stablecoin, the Government of Bermuda will accept that stablecoin for payment of goods and services in Bermuda.”

He said that it is about reducing the friction of monetary transactions.

“From that perspective it will be a Bermuda dollar-based stablecoin,” he said.

The Bermuda Virtual Tech Summit 2021 is organised by the Bermuda Business Development Agency. It continues tomorrow and Friday. For more information seewww.bda.bm/events/bermuda-virtual-tech-summit-2021/