Bermuda has a population of just 70,000 people. But it’s looking to become a major destination for cryptocurrency businesses.
In November 2017, Bermuda Premier David Burt, the equivalent of Bermuda’s prime minister, created a blockchain task force in an effort to “bring new business to the island, help boost GDP and create meaningful jobs, while helping to prepare our financial system and economy for the future.”
It worked. In April 2018, the crypto exchange Binance signed a deal to open a $10 million compliance center in Bermuda. At a joint press conference with Binance CEO Changpeng Zhao (clad in Bermuda shorts), Burt made his goals very clear: “We want to ensure that Bermuda is the world’s number one place for regulation inside this space.”
In July, Bermuda implemented regulations to allow for fast approvals of ICOs (initial coin offerings) on the island. By October, it issued its first ICO license to crypto company Uulala. In December, the Bermuda Monetary Authority introduced a regulatory framework for all digital asset custody businesses.
And in February of this year, Signature Bank of New York made waves when it announced it will provide business bank accounts to Bermuda-based crypto companies.
Burt says it’s all part of an effort to make Bermuda, already known as a destination for insurance companies, equally popular with crypto companies. “We are known as an international financial services center,” Burt said on the Yahoo Finance live show YFi AM. “We want to make sure that companies in Bermuda have the ability to innovate in what they do using digital assets, so it’s important to have that regulatory framework so that they don’t go somewhere else that may have it.”
The open-arms approach has succeeded in attracting 70 companies so far, Burt says, to open Bermuda operations. He tells Fortune that the QuadrigaCX fiasco (the company’s CEO died suddenly and no one else knew the keys to access the company’s stored crypto assets) could have been avoided if QuadrigaCX had been licensed in Bermuda, “because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual.”
And even as some big banks have announced blockchain trials (JPMorgan Chase launched JPM Coin, a token for internal use only), Burt cautions that this isn’t about blockchain hype.
“There are those persons who are caught up in the hype,” says Burt. “But the people who are building serious business models behind blockchain have been building these things for two and three years. The growth opportunity is for companies to set up in Bermuda and use our unique regulatory framework. Our regulatory environment is very strict, has very difficult hurdles, and we say that’s a good thing because we want serious companies and institutional investors. We don’t necessarily want the wider scale that can cause reputational damage to our industry. The incentive we offer is regulatory clarity.”
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.