Headline: Why is Bermuda becoming a hot spot for cryptocurrency?
Body:
Headline: Why is Bermuda becoming a hot spot for cryptocurrency?
Body: White sands… calm breezes… it all sounds really good. I have never been to Bermuda before, but it would seem that the Bermuda government is going to some efforts to make their island alluring to cryptocurrency firms. Just what are they doing to accomplish this? Let’s take a look.
Besides the beaches, what makes Bermuda attractive to cryptocurrency?
- There is relatively little red tape in Bermuda. What government intrusion does exist is aimed at educating people to increase the potential workforce.
- Bermuda has significant experience in the financial sector For centuries, they have been a very active center for both insurance and re-insurance. Related to this, they have a regulatory framework to support Initial Coin Offerings.
- AML regulations are broadly written, but, they do provide some protection for institutions.
- There is a defined licensing process for a digital asset firm. First, there is a “sandbox” test where different business operations are tested. Then, a modified license is granted where the firm is permitted to most of what they want to do, and they are monitored. Finally, a full license is issued. Usually, this entire process lasts less than a year, but this is not written in stone.
“The future of finance is digital,” said the Bermudan Premier and Finance Minister Edward Burt, who believes there are still considerable benefits to be gained from digital assets and blockchain technology. Already, there are 17 licensed crypto firms operating in Bermuda. In 2022 alone, the little island added 14 entities focused upon digital assets, including 4 cryptocurrency entities. Even Coinbase seems ready to start an exchange there.
The licensing requirements in Bermuda include prudential supervision that examines risk management, governance and cybersecurity, as well as compliance with anti-money-laundering and counterterrorism financing regulations, such as sanctions screening and transactions monitoring, Mr. Swan said. The regulator also uses monitoring tools from blockchain analytics firm Chainalysis Inc. to help with its risk-based supervision, he added. (Doesn’t Chainalysis look like a familiar old friend, by now?) Truly, the digital asset industry is cozy.
The Verdict
Well, we can see a very interesting pattern, when looking at a small country like Bermuda. In order to capitalize upon the cryptocurrency craze, the country needs to embrace entrepreneurial roots. In the case of Bermuda, it has a very long history supporting entities involved in the financial sector. So, Bermuda has made a choice, they have decided to make the island nation a sort of incubator for digital asset firms. This could possibly mean a lot of income from taxes and tourism related to the cryptocurrency industry. Of course, fostering this incubator also makes them liable to making mistakes that might allow people to take advantage of them and lose face in the international competition. This is the crux of the dilemma facing any country trying to become known within the cryptocurrency space. It will be interesting to see what happens within the next 5 or 10 years.
REFERENCES
Bermuda Seeks to Expand Crypto-Friendly Regulation to Become Digital Asset Hub (fool.com)
Bermuda still open to crypto firms, says premier: Report (cointelegraph.com)
Bermuda Doubles Down on Crypto Despite Recent Market Turmoil – WSJ
Coinbase Receives Bermuda License, Outlines Global Expansion Plans (yahoo.com)
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.