Bermuda is moving forward on virtual currency legislation as it seeks to attract fintech entrepreneurs, the country’s Minister of National Security noted during an overview of its proposed fintech regulatory framework at the Bermuda Underwater Exploration Institute, according to the Royal Gazette.
The minister, Wayne Caines, gave the presentation to a standing-room-only audience. Next month, the Virtual Currency Business Act is scheduled for discussion.
The Virtual Currency Business Act has been proposed despite the fact that there are no examples to follow, said Kevin Anderson of the Bermuda Monetary Authority, the financial-services regulator.
The act will be a “shining example” for what Bermuda can accomplish, he said. A 150-page paper on the Virtual Currency Business Act was posted on the BMA’s website. Feedback must be submitted by May 2.
The VCBA defines “virtual currency business” as the provision of the following activities: issuing, selling or redeeming virtual coins, tokens or any other form of virtual currency. This would include an ICO business on behalf of customers. The act would also cover payment service providers, defined as: “a person whose business includes the provision of services for the transfer of funds.”
It would also cover virtual currency exchanges, virtual currency wallets, and virtual currency services vendors, defined as any business providing specific virtual currency-related services to the public. The legislation will address the intersection of cryptocurrency and fiat, preventing fraud and market manipulation, the integrity of cryptocurrency owners, clear descriptions of the risks for prospective investors, BMA enforcement powers, Caines said.
The government is finding it hard to keep up with the number of people who want to come to Bermuda as it plans to regulate virtual currency, Caines said. He said it is “phenomenal” that the government is going to London this weekend where it will meet with 20 interested companies.
Cryptocurrency entrepreneurs want to see rules in what is a mostly unregulated part of the global finance industry, said Lydia Dickens, manager of government’s business development unit. She said the entrepreneurs are looking for legal certainty. John Narraway, a tech entrepreneur and member of the Government’s Blockchain Business Development Working Group, agreed, noting that foreigners are more interested in regulatory certainty than tax advantages.
Meanwhile, ICO legislation, scheduled for discussion tomorrow, has been tabled.
The ICO legislation will require the Minister of Finance’s consent for ICOs. ICO issuers will have to collect, verify and retain customer identity information.
Last year, Bermuda’s Premier and Finance Minister, David Burt, launched the Blockchain Task Force. It included a legal and regulatory working group to ensure that the country creates a blockchain-friendly environment for interested organizations and startups.
Whether an ICO falls within BMA’s regulatory boundaries can only be decided on a case-by-case basis, the agency noted in a January press release. It noted there are no requirements ICOs must comply with at the present time. It further noted that existing financial regulations do not apply to unregulated ICOs. The BMA encourages the investing public to be prudent and mindful of their accountability for their actions in this increasingly fast-moving and complex landscape.
The government will also attempt to establish a Bermuda E-ID scheme this year. This will be a national digital identification program for businesses and residents that will strengthen the country’s fintech credentials. It will include rules for cryptocurrency exchanges.
The Caribbean Financial Action Task Force will assess Bermuda’s anti-money laundering and anti-terrorist financing measures. Anderson said the BMA would hire more staff.
The national ID scheme will eliminate the need for multiple hard copies of documents and to give individuals control over their data. A single aggregation platform will allow people to comply with Know Your Customer and Anti Money Laundering rules.
The scheme will speed up customer verification for banks and financial services and enable fast-track immigration. Caines said fintech-related legislation could be released every other month.
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