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Alarm bells should sound during this ‘platinum’ period of cryptocurrency

Sign of the times: David Burt, the Premier, has been busy striking partnerships designed to put Bermuda at the forefront of the global fintech conversation. But is this a case of dipping too far into the unknown? (File photograph)

A succession of memorandums of understanding with cryptocurrency firms is starting to sound like the promises made by the Progressive Labour Party during the failed “platinum period” when plans for new hotels failed to materialise.

The Government has signed a raft of MOUs, which are non-binding, with companies amid promises of investment in jobs and training.

The terms of each MOU were non-specific and never stated what a minimum requirement was. There also appears to be discrepancies between public announcements and the terms of some of the MOUs. In addition, one MOU almost mirrors an MOU recently announced in another jurisdiction.

The One Bermuda Alliance is a party of empowerment and diversity, so we would naturally welcome any initiative that creates new opportunities for our fellow Bermudians. However, more detail on these MOUs needs to be provided and more assurances given that this industry is here to stay before we can give it our full backing.

At the moment, it resembles the previous platinum period when the PLP government granted special development orders left, right and centre, and promised new hotels only for nothing to materialise.

Cryptocurrency has created a buzz in some areas, but we should not forget that more than 80 per cent of initial coin offerings are scams and that 92 per cent fail to reach the trading stage. This does not say that there isn’t potential business for Bermuda, but the hype has outpaced substantive sober discussion.

The Premier tweeted about Arbitrade after a presentation last month: “The team demonstrated their cryptocurrency platform and explained plans to create more job opportunities in Bermuda for Bermudians”.

But in a lengthy statement, Arbitrade, when it announced it would domicile in Bermuda, made no mention of any jobs being created. We hope that was an oversight — it would be helpful if that can be clarified.

Likewise, the details of an MOU with Binance, which states that it will “create at least 40 jobs in Bermuda”. When this was originally announced by the Premier, he said in a statement that Binance would “develop its global compliance base in Bermuda, creating at least 40 jobs in Bermuda, with at least 30 jobs for Bermudians”.

We hope that the omission in the MOU about the jobs for Bermudians is another oversight and can also be clarified. If there are no jobs for Bermudians, we would have to question the PLP’s stated position of putting Bermudians first.

The MOU with Medici Ventures promised the creation of 30 jobs over three years, but failed to say who these jobs were for, or at what level. The announcement of an MOU involving B-Seed Partners, FinHigh Capital and BFS Holdings as partners in a new Bermuda venture, Bermuda FinTech Accelerator spoke only vaguely about the creation of jobs.

Shortly after announcing the MOU with Medici, the Premier also announced an agreement with Bitt.com and Gabriel Abed for free consultancy, but never mentioned that Medici has invested $7 million in Bitt.

No agreement has been tabled with Bitt.com. In life, nothing is free and one must ponder if the relationship between Medici and Bitt.com allows them to agree to a “no cost” consultancy or is Bermuda really “another world”.

The MOU with Omega One states that the firm will “provide favourable consideration of Bermuda residents and Bermuda-based businesses as part of internal employment and onboarding policies and procedures, with the expectation of adding 20 local jobs in Bermuda over three years”. That is hardly a resounding commitment to employing Bermudians.

What all the MOUs have in common are vague references to something — up to $10 million in training, or a “potential investment” of up to $10 million. What they also have in common is no apparent minimum requirement, whether in terms of investment or jobs.

There are many questions that need to be answered:

• When can the people of Bermuda expect to see signed contracts?

• When can the people of Bermuda expect the new jobs promised?

• What immigration fast-tracking has been agreed to?

• What number of permits are permitted?

• Can the Government assure the people of Bermuda that this new industry is sustainable?

Many will remember the dot-com crash when so many companies went bust. Can we be sure that this is not going to happen in the field of cryptocurrency?

As I stated, the OBA is a party of hope and opportunity, and we will support initiatives that are designed to do that, but we need more details other than the vague promises made in a series of MOUs.

Michael Dunkley is the Shadow Minister of National Security and the MP for Smith’s North (Constituency 10)