Something unusual has just happened in Bermuda, the Caribbean island paradise, retreat for the rich and offshore haven — the government has told the island’s banks that they are just not moving fast enough into the cryptocurrency market. It’s a rare occurrence, because most governments are taking a cautious approach to cryptocurrency and none seem to be insisting the conventional banking industry adopts a crypto-friendly approach.
A new class of bank for crypto
In fact, Bermuda is going even further. It is making amendments to its Banking Act so that it can establish a new class of bank that will be able to serve the crypto community, fintech startups and any other type of business that is blockchain based.
The local banks have only themselves to blame for this radical move. They have been denying service to crypto companies, citing fears about risk and regulatory concerns as the reason for shutting the door in potential clients’ faces.
Government supports fintech growth
The government takes a rather different view: Bermudian Premier and Minister of Finance David Burt said that the banks’ stance “cannot be allowed to frustrate the delivery on our promise of economic growth and success for Bermudians.” It appears that Bermuda wants to emulate the successes of jurisdictions like Gibraltar and Malta in becoming safe havens for blockchain explorers, and they all share the characteristic of being relatively small in terms of population, but big on financial services that serve the whole world. Of course, this is perfectly understandable: if you don’t have the environment to be a manufacturing or agricultural economy, financial services are the best way of ensuring that your economy thrives, especially if you keep introducing innovations that attract companies or individuals who can’t find a banking home elsewhere.
David Burt also said in parliament: “The fintech industry’s success globally depends on the ability of the businesses operating in this space to enjoy the necessary banking services. In other jurisdictions, banking has been the greatest challenge and for us in Bermuda, it is equally so and therefore it must be resolved.”
Bermuda welcomes Binance and Shyft
He clearly sees that Bermuda’s future must not be held hostage by the banks’ fear of the blockchain. This year Bermuda has already signed deals with Shyft network, which will reportedly provide $10 million on blockchain technology education and economic development on the island, and Binance is on Bermuda to establish funding for educational programmes related to fintech and blockchain. It has said it wants to build a “global compliance base” on the island.
It’s a smart move by the Bermuda government and is yet another step forward in opening up the banking sector worldwide to the reality that businesses operating in the crypto sector need forward-thinking banking — and that they’re going to grow in strength rather than disappear. Ignore them at your peril.