A bid to set up and regulate the cryptocurrency business is on the right track, an expert in data management said yesterday.

Stuart Lacey, CEO and founder of Bermudian tech start-up Trunomi, said proposed legislation would create a solid foundation for Bermuda to cash in on the booming industry.

He said: “One of the things we are seeing is there is a massive, pent-up demand for this.

“More money has been raised through this than has been raised in all other traditional vehicles combined in the last 12 months. With so much demand, supply is a very important thing. There is an opportunity for us to be able to participate seriously in this space. I think it’s positive for the island and it’s creating a positive base for a new economic pillar for Bermuda.”

The Companies and Limited Liability Company (Initial Coin Offering) Act, tabled in the House of Assembly last Friday, was designed to make ICOs a restricted business that requires consent from the Minister of Finance.

The legislation also sets out requirements that applicants have to meet to set up in business. Mr Lacey said he was “very impressed” by Government’s collaborative approach on the legislation. He said: “There is a sense out there that there is a bit of a race to be the first jurisdiction to get it done. I think it’s not about getting it done first, it’s just about getting it right first.”

Mr Lacey said that the regulations — combined with the island’s financial infrastructure — would help to attract quality companies to the island.

He said: “People who cannot meet the Bermuda standards simply won’t come here.

“It’s not about just attracting all companies wanting to launch ICOs, it’s about attracting the best companies.”

ICO documents will have to include a prominent risk warning under the proposed Bermuda legislation.

The warning will have to include information regarding any known “substantial risks” to the project, details about the client’s rights if the project does not go forward and information about any disclaimers in respect of guarantees.

The Bill also carries penalties for anyone who knowingly makes untrue statements in their documents.

Offenders could face up to five years in prison and as much as a $250,000 fine.

The Bill makes provision for a fintech advisory committee to advise the minister on matters related to the industry.

The committee will have at least five members and at least three of them will be senior industry professionals with expertise in fintech business, blockchain and distributed ledger technology.

The advisory committee will also help to create a code of conduct for ICOs to give guidance about responsibilities and requirements that operators in the sector will have to stick to.