‘Technology outpacing legislation’ in Bermuda
Bermuda digital tech industry regulations should change from being legislation-based to policy-based to make them more easily adaptable to swiftly changing technology.
That was the word from Simone Smith-Bean, managing director of the law firm Smith Bean & Co, on the second day of the Bermuda Virtual Tech Summit 2021. She spoke as part of a panel called “Cutting Edge Innovation in Bermuda”.
“As much as words can be stagnant on a piece of paper, and as much as legislation can be manipulated, it is still a barrier to some innovation,” she said.
She gave an example of one client trying to create a financial technology company.
“The licence does not fit to their company,” she said. “Working through that problem with the Bermuda Monetary Authority is somewhat of a struggle, because the actual legislation does not allow for it.”
She said that innovation is outpacing the legislation.
Ms Smith-Bean is a member of the Bermuda Development Agency fintech legal and regulatory committee.
“Because I am on a committee that talks about these things I can bring it up to the committee,” she said. “It takes some time for that information and policy to get back to the top for changes. There are a lot of things that go into changing these legislations.”
To be changed, the legislation has to go to Parliament, a potentially cumbersome process.
“Not all of us have speed dial to Parliament,” she said.
Ms Smith-Bean said that the goal is to have multiple companies innovating in many different ways, but often the legislation was written long before the technologies in question even existed.
She said that some companies going through the set-up process in Bermuda start to make the application and are then told that they are not able to operate in that space because they are missing this or that, and it is not allowed.
Bermuda was among the first countries in the world to implement fintech legislation when the Digital Asset Business Act 2018 (DABA) was implemented, regulating digital-asset businesses including payment service providers, electronic exchanges, custodial wallet services and market makers or traders of digital assets. Ms Smith-Bean praised Bermuda for taking a leadership role in this regard.
“They have done a great job in at least being the springboard for a lot of companies to get some semblance of what they can do and be able to be licensed,” she said. “That is the end goal for most companies. People want legitimacy. People want to be able to show how stringent their business or their organisation can be, and let a regulator prove to everybody that they are great.”
Ms Smith-Bean has found that the Bermuda Monetary Authority is “really open” to assist, develop, grow and change things that need to be changed.
“It is so good to be in a great relationship with regulators,” she said. “Some jurisdictions don’t have that all. We are an industry leader in that respect. I have to always suggest to my clients Bermuda first as an option, knowing that we have offices in the Bahamas as well. But Bermuda first because of that stability and the ease of doing business with the regulator and being able to get your questions answered. Everything is above board when it comes to that.”
Sandra DeSilva, chief executive officer and chief architect of Nova; Nina Kilbride, founder of Mothership; and Vanessa Williams, chief compliance officer at CrossTower, also took part in the panel discussion.
The Bermuda Virtual Tech Summit 2021 is organised by the Bermuda Business Development Agency. It continues tomorrow. For more information seewww.bda.bm/events/bermuda-virtual-tech-summit-2021/