Premier: New Class Of Bank For FinTech

June 29, 2018 | 22 Comments

“The Banks and Deposit Companies Act 1999 will be amended to allow for a new class of bank that will provide banking services to Bermuda based FinTech companies,” Premier and Minister of Finance David Burt said.

Speaking in the House of Assembly today [June 29], the Premier said, “The‘ICO Bill’ and the Digital Asset Business Act, both passed in this Honourable House have set the stage for the increased incorporations and growing commitment to doing business in Bermuda by the most innovative companies from around the globe.

“The business conducted by these companies is not traditional,” the Premier said. “In the wake of the global financial crisis and the ever-broadening risk mitigation strategies, banks are increasingly risk-averse.

“While that is understandable, as given their risk tolerances, to date local banks have been unwilling to offer services to newly incorporated FinTech and distributed ledger technology companies.

“The simple fact of the matter is that the FinTech industry’s success globally depends on the ability of the businesses operating in this space to enjoy necessary banking services. In other jurisdictions, banking has been the greatest challenge and for us in Bermuda, it is equally so and must be resolved.

“Bermudians need options in banking; the FinTech industry needs an innovative, robust banking solution. Those needs are not mutually exclusive and this Government is prepared to take the steps necessary to achieve both goals.

“I will shortly table in this Honourable House, a Bill that will make amendments to the Banks and Deposit Companies Act 1999 to create a new class of bank.

“Prior to introducing the legislation to regulate digital asset businesses, my colleague, the Minister of National Security, along with a technical team, consulted with the Bermuda Bankers’ Association [BBA], outlining the Government’s plans to position Bermuda as a premier jurisdiction for distributed ledger technology.

“The response received from the BBA was commensurate with their ongoing need to manage their risks to continue to operate in accordance with their existing correspondent banking relationships.

“Their reticence, no matter how well-founded, cannot be allowed to frustrate the delivery on our promise of economic growth and success for Bermudians.

“To ensure that the Government is able to effectively execute on its FinTech initiatives, as well as encourage responsible FinTech innovation that provides fair access to financial services and fair treatment of consumers, the Banks and Deposit Companies Act 1999 will be amended to allow for a new class of bank that will provide banking services to Bermuda based FinTech companies.

“These amendments will allow for local and international participants to fill a critical need in servicing FinTech companies. However, it is not only FinTech companies that need more banking options, Mr. & Mrs. Bermuda should have more choice and more competition.

“Our traditional banks, those household names, have played their part in this community over many years. It is a fact of business and a fact of life that survival and growth can only be achieved through an ability to evolve and innovate.

“Legacy industries the world over have lost that ability and the future belongs to those who can quickly lay a foundation for growth, respond to emerging trends and preserve a reputation for sound management in the process. For countries it is no different, Bermuda must be nimble or we will be left behind.”

The Premier’s full statement follows below:

Mr. Speaker, this Government is on the cusp of marking one full year in office.

These eleven months have been a non-stop effort to deliver on what we promised the people of Bermuda and what they in turn gave a resounding mandate of support. Mr. Speaker, while there are some easy, short-term fixes for the issues in our community, our responsibility as the Government is to take the long view and lay a foundation on which we can build the prosperity of future generations. This includes building the necessary capacity for Bermudians to properly reap the benefits of growth in this economy.

Mr. Speaker, Honourable Members and the public will recall that in the 2017 Speech from the Throne we set out our vision for this country and it is succinctly contained in the following extract from that document:

“The core of the Government’s philosophy is focused on growing the economy while empowering all Bermudians to become full participants in the economic miracle that is Bermuda. The Government will ensure that Bermuda’s success in attracting the most innovative companies from around the globe to Bermuda is increased and that the quality of life for Bermudians is also enhanced by the presence of those companies.”

Mr. Speaker, that is exactly what we have been doing in the area of FinTech and distributed ledger technology. The world’s leaders in this area have been attracted to Bermuda directly as a result of the foundation we have laid legislatively and in the regulatory space. The ‘ICO Bill’ and the Digital Asset Business Act, both passed in this Honourable House have set the stage for the increased incorporations and growing commitment to doing business in Bermuda by the most innovative companies from around the globe.

Mr. Speaker, the business conducted by these companies is not traditional. It does not fit the mold of what we have come to know as Bermuda’s traditional model and as such there an understandable resistance to providing the measure of support and services which might ordinarily apply in a new growth industry.

One such service is banking. In the wake of the global financial crisis and the ever-broadening risk mitigation strategies, banks are increasingly risk-averse. Mr. Speaker, while that is understandable, as given their risk tolerances, to date local banks have been unwilling to offer services to newly incorporated FinTech and distributed ledger technology companies.

Mr. Speaker, the simple fact of the matter is that the FinTech industry’s success globally depends on the ability of the businesses operating in this space to enjoy necessary banking services. In other jurisdictions, banking has been the greatest challenge and for us in Bermuda, it is equally so and must be resolved.

Mr. Speaker, resolving this problem has in fact yielded greater opportunity. In our 2017 Platform, we promised to:

“Develop domestic capital markets that create local investment vehicles for Bermudians to invest in Bermuda. We must provide the banks with competition and allow local entrepreneurs alternative access to capital thus boosting local business.”

The steps I announce today move us closer to realising the fulfillment of that promise. Mr. Speaker, Bermudians need options in banking; the FinTech industry needs an innovative, robust banking solution. Those needs are not mutually exclusive and this Government is prepared to take the steps necessary to achieve both goals.

Therefore, Mr. Speaker, I am pleased to advise this Honourable House and the public that I will shortly table in this Honourable House, a Bill that will make amendments to the Banks and Deposit Companies Act 1999 to create a new class of bank.

Mr. Speaker, it is important for Honourable Members to be aware that prior to introducing the legislation to regulate digital asset businesses, my colleague, the Minister of National Security, along with a technical team, consulted with the Bermuda Bankers’ Association [BBA], outlining the Government’s plans to position Bermuda as a premier jurisdiction for distributed ledger technology. The response received from the BBA was commensurate with their ongoing need to manage their risks to continue to operate in accordance with their existing correspondent banking relationships.

Their reticence, no matter how well-founded, cannot be allowed to frustrate the delivery on our promise of economic growth and success for Bermudians.

To ensure that the Government is able to effectively execute on its FinTech initiatives, as well as encourage responsible FinTech innovation that provides fair access to financial services and fair treatment of consumers, the Banks and Deposit Companies Act 1999 will be amended to allow for a new class of bank that will provide banking services to Bermuda based FinTech companies.

Mr. Speaker, I am grateful to the Bermuda Monetary Authority who have advised on these proposals and have confirmed that in order to achieve these objectives the Act should be amended as follows:

  • i] including a new class of license that may be granted by the BMA called a Restricted Banking License;
  • ii] adding a new Schedule to the Act that outlines the types of business undertakings that Restricted Banks can service, together with a provision that permits the Minister of Finance, after consultation with the BMA, to amend the business activities from time to time to encompass new innovative businesses;

Mr. Speaker, these amendments will allow for local and international participants to fill a critical need in servicing FinTech companies. However, it is not only FinTech companies that need more banking options, Mr. & Mrs. Bermuda should have more choice and more competition.

Therefore, consistent with the pledge made in this year’s Budget Statement, the Ministry of Finance has commenced consultation on expanding the types of banks that can operate in Bermuda. Reform of our domestic banking sector is necessary to reduce costs for Bermudians, while providing more opportunities for Bermudians to work and more access to capital enabling more Bermudians to become owners and not just employees.

Mr. Speaker, our traditional banks, those household names, have played their part in this community over many years. It is a fact of business and a fact of life that survival and growth can only be achieved through an ability to evolve and innovate.

Legacy industries the world over have lost that ability and the future belongs to those who can quickly lay a foundation for growth, respond to emerging trends and preserve a reputation for sound management in the process. For countries it is no different, Bermuda must be nimble or we will be left behind.

Mr. Speaker, the people of Bermuda demanded change in 2017 and spoke loudly of the need to transcend the transactional and deliver a transformational agenda. The proposals outlined today are a critical first step towards broadening banking services and is another step forward in the commitment we made to building a better and fairer Bermuda.

Thank you, Mr. Speaker.

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Comments (22)

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  1. sandgrownan says:

    And there’s your vehicle for money laundering via a casino. Bingo. And there goes Bermuda’s reputation.

  2. Question says:

    Ah. A new class of bank that’s not so ‘risk averse’ as any existing bank.

    This has disaster written all over it.

    • Wahoo says:

      Kindda makes you want to cash in and stash your bitcoins under a mattress.

    • frank says:

      the Bermuda banks our right not to support that type of banking
      it is shady and they could loose their credibility with the banking
      regulators
      I think Bermuda should take a giant step back and wait for more information there is no rush
      crypto currency is currency mainly used by crooks our creditors
      want real money not play money
      Bermuda has to buy buses trash trucks and ferries with real money
      this is no game
      Bermuda is gullible that’s why all those companies our running here
      come on lets step back now before people loose all their money
      just ask Warren Buffet for his advise

  3. red rose says:

    It disturbs me greatly when I see that our correspondent banks – the US banks that partner with ours – are risk averse

  4. Justin says:

    Burt and his gov’t have already embarrassed Bermuda on the international stage with their gay marriage debacle, and now they are going to do it a second time with cryptocurrencies.

  5. Family Man says:

    Petrovich and Kalamatov, bankers to the Fintech and Casino markets. Offices in Bermuda, Leningrad, Odessa and Belarus.

  6. Rocky5 says:

    Won’t be putting any of my money or “crypto-currency” in a “non-risk averse Bank”, but I know who will!!

  7. jt says:

    Maybe this new class of bank will also support casinos.

  8. Stevie says:

    Now going to bankrupt Bermuda. The writing is on the wall. Just like 1998-2012.

  9. Retro says:

    this is getting to the irresponsible stage. If there is anybody out there considering investing in an ico please do some research. Crypto currencies are a highly volatile investment

  10. Right on says:

    Well done PLP!

    It’s past time to kick the 40 thieves and their OBA cronies in the banks to the curb!

    It’s our turn to run a bank that is for the people and create jobs for our children and invest in Bermuda’s future! Maybe we can get some decent home loans and investment for small Black businesses? God knows we can’t get them from local banks!

    The current Banks are all about having fees to access our own money and telling us “no” on our loan applications unless your name is Dunkely, Gibbons or some other privileged family name who sit on the Bank boards!

    • Gustav says:

      Yes you might get some Tokens, but you have to,pay the interest in Hard USD
      What a Great Deal

    • Family Man says:

      Bermuda Provident Bank ring any bells for you? That worked out well didn’t it?

      BIU Credit Union? – at least they got a bail out so they’re still limping along.

      BIU Co-op grocery store?

      Union Asset Holdings ring a bell. They weren’t actually holding many assets were they?

      Is there a trend there?

    • jt says:

      Not arguing many of your points re local banks but suggesting that locals should jump in and in any way pin their personal finances to this new form of bank is terrible advice.

      • Ringmaster says:

        Any local bank needs access to and connections with worldwide banks. It’s not going to happen. This will be as successful as Antigua’s relationship with Alan Stanford. Disastrous and the rating agencies and regulators will put Bermuda on a black list and that’s the end of IB.

  11. Question says:

    Just what we need. Shady banks with low standards setting up here.

    This is Burt’s most dangerous idea yet.

  12. facts of the rock says:

    The brainwashed green t shirt followers will lose everything to the plp/biu.

    • puzzled says:

      And the irony is that bits and coins will end up in the ‘I don’t cair, carrybeehin’.

      The Russians are coming.

      Namaste’ and buy a sail boat.

  13. bermewjan says:

    …and there goes our FATF pass, followed quickly by our sovereign ratings with S&P, Moody, etc., and most importantly the demise of our financial services sector as our international companies are then forced to move to other more stable jurisdictions.

    Our current government certainly know how to mobilize there base, but are utterly naive when it comes to stable, growth oriented fiscal policies.

    Open your eyes, can you not see that this is the equivalent of throwing the baby out with the bath water?

    Numpties!

  14. Me says:

    What about Lovetech Equalitytech Bustech Educationtech and Trashtech ?????

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