‘Government Moving Swiftly, But Very Carefully’

February 26, 2018 | 39 Comments

“The Opposition’s Budget reply regarding blockchain and cryptocurrency lacked vision,” Minister of National Security Wayne Caines said, adding that it “has the potential of transforming our economy by creating entirely new industries” and the Government is “moving swiftly, but very carefully in this space.”

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Opposition’s Comments

In delivering the Budget Reply, Opposition Leader and Shadow Finance Minister Jeanne Atherden said, “The Government wants to diversify the Bermuda economy. A laudable ‘aspirational’ goal, yes.

“However, what will be the extent of job creation for Bermudians? How will this be achieved? We are told that the Government is moving with urgency with respect to blockchain and digital currencies.

“Other countries are grappling with the proper regulation of these new technologies. Regulators the world over have taken a dim view of these developments. Just this week, the Governor of the Bank of England, Mark Carney, states that Bitcoin has failed as a currency.

“The haste with which Government is moving here raises some concerns. The timing is key as Bermuda is preparing for an impending CFATF assessment. Great care is needed to avoid any harm that could be caused if Bermuda is not properly prepared for digital currencies.”

Premier’s Comments

At another portion of the Budget Reply, Ms Atherden said “how does Bermuda safely take advantage of the new bitcoin industry,” and during the debate in the House later, Premier David Burt said there is “no such thing as a bitcoin industry,” and said using the term “demonstrates the lack of depth on this subject from the Opposition.”

Saying it is a “hard issue to get your head around,” the Premier said at the “very basic level we have to understand it” as “while we sit here and squabble, our competitors are moving.”

Audio excerpt of Premier Burt’s comments on the House on Friday

Minister’s Comments

Following the reply, Minister Caines said, “The Opposition’s Budget reply regarding blockchain and cryptocurrency lacked vision.

“Let me be crystal clear, we will be pushing forward into this space, leaving no stone unturned as it relates to the legal and regulatory requirements of blockchain and digital currencies.

“The public can be assured that this Government is working collaboratively with key stakeholders in the financial services sector, both locally and abroad. We have a disciplined, systematic and comprehensive approach to our entry into the market.”

Addressing the Governor of the Bank of England’s assessment of digital currencies, Minister Caines said he’s aware of Mr. Carney’s remarks, but noted, “Their view is that as bitcoin sits today, it has not been as successful as a currency from the traditional aspects of money.

“However, I should stress that its store of value properties and its use as a medium of exchange are being created as we speak. What we are seeing is the on-boarding and education of the global community as they start to experiment and begin to interact with the next internet.”

The Minister continued, “Many countries around the world have approached this space in many different ways. For example, Japan has given bitcoin currency status and their government and industry have collaborated to be the first epicenter for these financial systems.

100 minute live video replay of the Minister’s Cryptocurrency Lunch & Learn held last week::

“Switzerland’s creation of an Initial Coin Offering [ICO] regulation was more than two years in the making. And Canada has labelled them as properties [or commodities] and they are subject to the same laws that largely exist in traditional financial settings.

“The Commodities Future Trading Commission [CFTC] in the United States recently along with the Securities and Exchange Commission [SEC] head called for self-regulation of bitcoin exchanges, stating that shying away from governments or the over regulation of these systems so early will disable the potential benefits that they hold for consumers.”

Lastly regarding CT Financial Action Task Force, Minister Caines said, “The Ministry of National Security has devoted significant resources to ensure Bermuda is ready for its assessment later this year.

“It is just plain wrong to suggest that we would do anything to jeopardize that assessment. So, recognizing how traditional business views anything new, we have assembled a team that includes an advisor to the OECD, and an individual who has designed exchanges that have more secure Know Your Customer [KYC] compliance measures than even the banks.

“We know we’re going to be assessed; we are working to pass that assessment and everything we are doing in the blockchain ‘space’ is with an eye on using Bermuda’s existing, sterling reputation to guide our steps.”

Minister Caines concluded, “We have to look at growth in new ways, and we are being innovative in our vision. In fact, it is the non-financial uses of blockchain where it has been said the next big leap in technology since the internet has arrived. The potentials are virtually limitless, but would include matters such as the following:

  • “Bermuda is looking to move its land registry on to its own secure blockchain network, where property records can be kept safely, securely and accurately stored and maintained.
  • “Healthcare/medical records. This would be a blockchain where things such as patient medical and hospital records, and insurance claims and data information could be safely kept and securely shared with both healthcare providers — for example, your GP — but also with hospitals in and outside Bermuda, as well as health insurers. The storage and sharing of this data would save a huge amount of effort and hassle when having, for instance, to file claims or to move from one GP to another.
  • “Transport and shipping. The ability to easily track goods — in particular, say, food — over a blockchain is something that companies such as Maersk are already using. Essentially, by having the goods’ data being tracked on the secure network, they cannot be tampered with.
  • “Data storage. Using blockchain technology will mean that cloud storage — i.e., data storage that is kept online over the internet, rather than using physical devices such as hard drives — will be increasingly used.
  • “And there are the potential benefits blockchain brings to governance in general. There are two aspects to this. The first is transparency in the voting process and the second is anonymity, i.e., a voting system where voters can anonymously select candidates. Importantly, their votes are accurately recorded and cross-checked. Voting may eventually be done online or using smartphones as well.

“This is a new age of technology, and we cannot turn back or look away from it. We must embrace it. The possibilities of technological revolutions can create new opportunities for job creation in areas and fields we have never seen before.

“This has the potential of transforming our economy by creating entirely new industries. Our goal is to see Bermuda take a leading role in advancing blockchain technology, and this Government is moving swiftly, but very carefully in this space.”

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Comments (39)

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  1. Quinton B Butterfield says:

    PSA: If the mention of Blockchain sends you into a frenzy about Bitcoin, then you have not done enough to educate yourself on the technology.

    • Do Right says:

      Agreed!

      • HMMM says:

        In order for something to be a true currency. It must be traded. At the moment that is not the case with Bitcoin and other similar crypto currencies. People are buying and hoarding, not trading. If the large crypto currencies like Bitcoin that have been around for a decade or more, are not gaining momentum as a tradable currency then what hope does Caines think he has. Sure Bitcoin has grown in value, sure it has become popular, sure people are buying it as an investment. But who is trading with it? Lots of companies jumped on board with the idea, and have since jumped ship.

        I don’t know of a company or individual that can’t send money overseas within 24 hours and for $15 transfer fee when done electronically. What is the problem!

        • TMHsBattleAxe says:

          What is your point? That Caines can’t make a perfect currency? Anyway there is a bigger picture that you are missing. Bitcoin, or blockchain as some call it, is more than just a “currency”. Look into the technology and all the applications, not just what it can’t do.

          FYI there are two billion people who can’t easily send money overseas.

          Unfortunately you fit into the group of people who Quinton B Butterfield’s was addressing in his PSA. Gotta do more research.

          • Created says:

            What is the point? Huh?! That it is NOT a currency unless it is traded which is why most of these cryptoCurrencies have already failed or are doomed to fail. People are buying them solely with the hopes that they go up in value so they can sell for cash again.

            Then you say look into the technology! What technology? Its makeup is different (like bit torrent) and maybe a cool idea in principle but it not some super technology! Who can you call if your digital wallet is hacked, stolen or if you lost your password? Nobody! It happens daily and once your money is gone. Say bye!

            By the way your statement that there are two billion people that can’t send money overseas might be true, but who are those people and WHY can’t they transfer money. Do you think that those people that live in state controlled countries like North Korea will suddenly be liberated by Caines Coin? LOL They can’t because their countries internet is censored and controlled. Perhaps you are referring to those in terrorist sponsored states or individuals?

            Perhaps you and Quinton B Butterfield need to do more research and perhaps tell the WHOLE TRUTH when throwing numbers out there.

            • TMHsBattleAxe says:

              -That it is NOT a currency unless it is traded
              Yeah its traded. Not enough to satisfy your traditional definition of a currency but thats besides the point. Bitcoin was not created to be a perfect currency. It was created to solve the double spending problem that digital currencies had and to remove the finical institutions from online transactions. People hold it because there is a finite amount so its deflationary. If it was inflationary like fiat people would spend it more because holding would mean loosing money. This is why it is seen as more of a commodity.

              Most cryptocurrencies have a niche problem they are trying to solve, you make it sound like they are all trying to replace cash which is not the case. The name cryptocurrency is a misnomer and it sounds like you are getting hung up on that.

              -Who can you call if your digital wallet is hacked
              No one, and thats the point. Its the same if your life saving gets stolen out your mattress. There is a market for people who want to have full financial sovereignty. No one can help you if you lose it, but no one can freeze accounts and deny you service.

              -What technology?
              Look at what they are trying to do with land registry and digital ID’s for example. The list goes on and on. The are many applications for distributed immutable ledgers beyond digital currencies.

              -but who are those people
              I was mostly referring to people in third world countries. But also people in first world countries who have been denied banking services due to criminal convictions or whatever reason.

            • Ringmaster says:

              It’s really going to help all those from back of town to get jobs. There must be hundreds of them with the qualifications to take on the opportunities of blockchain/bitcoin etc.

              What a joke. Just more expats so where are the protests for jobs for Bermudians? Silence of course.

    • nerema says:

      I’d put this in the same bucket as the space industry, deep sea mining, Islamic finance, and offshore gambling. Mythical industries talked about by Burt in order to make it look like they have ‘ideas’.

  2. frank says:

    frankly I am not excited about bitcoin a I think the government should
    move very slowly on this.
    bitcoin is currency that you will never get in your hands it only lives in a computer.
    today at 11.15 am 1xbt =$10225 so in fact you will give some xbt exchange $10255 for 1 bitcoin someone gets the money all you get is a
    note in your xbt wallet that say you have I bitcoin.
    now lets say you want to sell it now you have to find another person
    that is more stupid than you to buy it
    this is nothing more than a cleverly thought out scam.
    the government needs to walk away fast our creditors want to be paid in
    real money not play money and our focus should be paying off our debt with real money not play money

    • TMHsBattleAxe says:

      “bitcoin is currency that you will never get in your hands it only lives in a computer.”
      – Whats wrong with that? That is Bitcoin’s strength. I can send it to anyone anytime instantly with no middleman. They don’t even need a bank account, just a cellphone and an internet connection. There are 2 billion un-banked people in the world, this will help the reach the worldwide economic market.

      Bitcoin is not a scam, the price doesn’t go up because you want it to. The price works the same as any other scarce commodity because there is a finite amount. So as adoption and transactions(demand) increase so does the price. People who invest see the bigger picture and are betting that the price will increase as we move to worldwide adoption. You don’t have to invest you can buy $10 worth of bitcoin just to take part in the revolution and buy something with it. Or you can use it to send money to family overseas as a cheaper alternative to Western Union.

      Either-way you should be exited, this is the biggest evolution in technology since the internet. Probably should do more research on the subject.

      • Toodle-oo says:

        I’ve just had an idea. How about an opportunity to demonstrate how bitcoin can take the place of Western Union ?

        Let’s say that I have only regular old fashioned meney in the bank. The university that my child attends overseas needs to have the upcoming year’s tuition paid to the tune of $50,000 . Normally I would send a bank draught , money transfer or CC payment .

        Lead me through a bitcoin transaction from scratch where I currently do not hold any but I want to jump on this revolutionary bandwagon and pay the university dues with it .

  3. Joe Bloggs says:

    One week ago Mark Carney, the Governor of the Bank of England and a world-renown economist said 2 things of note:

    First, “bitcoin fails to meet two key requirements of a currency: it is neither a medium of exchange, nor a store of value”

    Second, “It has pretty much failed thus far on … the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange”.

    Thankfully, the Bermuda Government knows better and is determined to get in on a device used by drug dealers and criminals to pay debts but a device which is shunned by mainstream businesses.

    • TMHsBattleAxe says:

      So you want us to believe the central banks? Bitcoin is a direct competitor, of course they don’t like it. There is a clear conflict of interest in your appeal to authority (fallacy).

      • shrew says:

        but you can’t argue against the points made can you? you invest 10k in bitcoin or any crypto curr and talk to us in 10 years. poor Caines. I thought he was a good guy… but he’s in the mud like the rest of them. looking for quick shiny solutions

        • TMHsBattleAxe says:

          I just wanted to pointing that out the “appeal to authority fallacy”.
          The is nothing to argue the statements are not true. But check it out anyway

          1a) Bitcoin is a medium of exchange. Proof being you can trade it for goods and services like what has been done all this time. You can even trade it on the Forex market. Some people consider it more of a commodity but it is being used as a currency.
          1b) It is a store of value. The altcoin market is measured in Bitcoin. People use Bitcoin as store of value for altcoins. It also has been used as a store of value in countries with rising inflation like Venezuela.

          2) His second point is repeating the first.

          Your argument is weak too. We are known for international business. Gov wants blockchain based international business in Bermuda. What is the problem? Don’t get caught up on Bitcoin your loosing sight of the bigger picture.

          • Joe Bloggs says:

            Yes, like our government you know better than one of the world’s leading economists.

            • TMHsBattleAxe says:

              I don’t know better, I just know BS.

              Asking the head of a central bank about Bitcoin is like asking the NRA about gun control.

              Saying it will fail because it doesn’t fit your requirements of a perfect currency is ridiculous since it was not created to be a perfect currency. It was created to solve the double spending problem that digital currencies had and to remove the finical institutions from online transactions. It does what it is supposed to and also works well as currency.

  4. aceboy says:

    Moving carefully??? lol No you aren’t, you are rushing into something you don’t understand.

  5. Do Right says:

    “However, I should stress that its store of value properties and its use as a medium of exchange are being created as we speak”. This comment shows a lack of knowledge on the Minister’s part regarding money/monetary economics, yet he has the arrogance to criticize the opposition. Many of us are starting to see through politicians such as Caines. While style over substance seems to win the day, Bermuda actually needs the latter way more then the former.

  6. Pro Crypto says:

    Blockchain is secure, cheaper, and faster than the legacy remittance industry in regards to sending digital assets across border. We are in the very early days. This technology has the potential to bank the unbanked and create new business models for the financial services industry. Bitcoin is only 1 protocol on the blockchain. There are thousands of Crypto currencies with one in particular being ethereum which is used by tech giants IBM and universities across the world. This space is legitimate and moving very fast, yes it has some bad actors but are we to now say we should stop using the Bermuda dollar because people can buy drugs using it? In fact it is easier to catch cyber crime vs fiat because bitcoin identity can be traced to point of purchase. If Bermuda does this correct the gains are substantial.

  7. Robert says:

    Gotta love Caines passion buh. And if you want to learn about crypto and block chain check out The Kaiser Report on http://www.RT.com.

  8. Politricks says:

    Is Estonia really the best jurisdiction of which to glean advice for this industry?

  9. The Original Truth™ says:

    Still waiting for a REAL plan of how PLP intends to regulate something that is decentralized. Anyone can make an ICO and put it online for crowdfunding. Most ICOs are scams or pipedreams that are so risky to regulate many countries won’t touch them.

    • Joe Bloggs says:

      Not to mention the fact that they cannot be traced.

      How will this impact all the Tax Exchange Treaties Bermuda has entered into? How can we provide requested information if it cannot be obtained?

      • TMHsBattleAxe says:

        Most coins and tokens are traceable. Bitcoin is a decentralised public ledger so yes it is traceable. Unlike cash you can see every transaction ever made.

        • aceboy says:

          Yes and that is why criminals who hack computer systems and install ransomware request payment in Bitcoin.

          Because it is so traceable….lol

          This all harkens back to Marc Bean and Fintech. He needed a way to transfer currency and the banks don’t like gambling.

          The PLP have taken the idea and run with it but very few of them have any real idea how it works or how we will make money from it. But it all sounds good to their supporters…..

          • TMHsBattleAxe says:

            Despite who uses Bitcoin doesn’t change the fact that it is traceable. Look it up yourself. Its perfect for paying taxes since Bitcoin give your whole transaction history. When it comes to hackers, they probably use it for its anonymity and decentralisation. They will still need to take extra precautions and a way to launder the money like anything else.

    • TMHsBattleAxe says:

      Bitcoin is just code on a blockchain created by a faceless entity. Cryptos like this are not who the regulation is for. Most crypto currencies are not 100% decentralised. A lot of them have regular business behind them, with either a global team or a head office somewhere. Look at ARK, XRP and POWER. These are who the regulations are for, real companies that just so happen to fund via an ICO. They want regulations so they can be seen as reputable and have already expressed interest in what the governments doing because we have a good international business reputation. There is literally a line of interested parties waiting to get in. Even other countries want follow our example to implement the same types of regulations. Just imagine a company coming all the way here to get started, That holds a lot of weight in the ICO world full which is full of exit scams.

  10. Stevie says:

    Moving swiftly & very carefully? Utter BS. Very quick to appoint one of de boys to a job really not needed, but very careful not to tell the truth. I hope bunion juice understands this, but like most people who are not stuck in a time warp, bunion juice will come up with the usual 24-12 answer. Why, clueless.

  11. spanner breath says:

    As long as they don’t handle it like they handled those construction projects!
    Berkeley
    Port Royal
    etc

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