Bermuda Banking on Fintech Boom
About Jeremy Leese
Jeremy’s practice focuses on corporate finance, mergers and acquisitions, corporate reorganisations and restructurings, banking and international real estate finance, structured finance, as well as regulatory and legislative compliance.
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In a recent announcement, the Premier of Bermuda, David Burt, who is also Minister of Finance, made it clear that his intention is for a “new class of bank” to come to Bermuda, with legislation on the way to create new services to cater to Bermuda-based FinTech companies. This was due to the island’s fledgling FinTech sector facing “understandable resistance” from banks, as their business model “does not fit the mould of what we have come to know as Bermuda’s traditional model.”
Mr Burt added the amendments to the Banks and Deposit Companies Act 1999 would create a new restricted banking licence and set out the sorts of services they could provide – together with a provision for the minister, after consultation with the Bermuda Monetary Authority, to amend their activities to “encompass new innovative business”. Mr Burt stressed that “Bermuda must be nimble, or we will be left behind.”
In the wake of the recent ICO amendments to the Companies Act and the new Digicel Asset Business Act, this further evidences the Bermuda government’s appetite to make Bermuda a significant player in the digital asset space.
Set against such a push is the type of press releases emanating from the likes of the Bank of England, who warned only last week that banks and insurers should be wary of crypto assets, because they can be highly volatile and vulnerable to fraud. The Bank’s deputy governor responsible for financial supervision stated that “in their short history, crypto-assets have exhibited high price volatility and relative illiquidity. Crypto-assets also raise concerns related to misconduct and market integrity – many appear vulnerable to fraud and manipulation, as well as money-laundering and terrorist financing risks.”
Bermuda has always been a shining light in the world of AML/ATF regulation, fully compliant with international standards and rightly proud of its hard-earned status as a blue chip offshore financial centre. Opening up new sources of business for the jurisdiction is to be applauded by all those with Bermuda’s best interests at heart, and is essential for our long-term economic fortunes.
Bermuda’s policy makers are quick to point out that Bermuda’s reputation for successful regulation, instead of being at odds with the FinTech push, actually makes the jurisdiction an ideal location. As the Minister of National Security, Wayne Caines, has pointed out: “The reason the world is becoming so energised about being in Bermuda is not blockchain. They are excited because we do things to a very high standard.” As a jurisdiction, we can be sure that we will not risk our enviable global reputation by allowing entry now to those who we have been so vigilant before in preventing from doing business in Bermuda. An effectively regulated, appropriately legislated, well respected business centre, Bermuda is well on its way to setting the global standard for creating an environment in which digital asset business can flourish.