The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ top digital assets regulator says there has been no slowdown in applications to do business from this jurisdiction despite the collapse in global cryptocurrency valuations, and is predicting that interest will only increase.

Christina Rolle, the Securities Commission’s executive director, told Tribune Business in a brief messaged reply that the Digital Assets and Registered Exchanges (DARE) Act and wider regulatory framework would continue to attract blue-chip companies wanting to conduct business from a properly supervised jurisdiction.

Digital currencies collectively have lost two-thirds of their value over a six-month period, dropping from a peak of $3trn to under $1trn, but she indicated that this market correction does not signal the industry’s long-term demise or undermine The Bahamas’ ambitions to establish itself as a hub for this financial services niche.

“I think what we are seeing is mostly as a result of severe over-leveraging and a lack of management of counter-party risks,” Ms Rolle told this newspaper. “The Securities Commission is not seeing a slowdown in applications. It’s my view that in the medium and long-term we will see more and more firms seeking out regulation.

“They will want to be in jurisdictions with a well thought-out and robust regulatory framework, particularly as they are seeking to court institutional investors.” Other Bahamian financial services providers also confirmed that the valuation crash appears not to disrupting this jurisdiction’s digital asset plans as they, too, have seen no slowdown in interest from entities wanting to either establish physical operations here or conduct business from, or with, the country.

Accountant John Bain, who previously told Tribune Business that The Bahamas’ entry into the digital assets space prompted him to reunite with Philip Galanis under the HLB Galanis name some ten years after they went their separate ways, said he had witnessed no slowdown in such inquiries with crypto players viewing the current turbulence as a temporary corrective cycle that all markets go through.

“I don’t see any interruption from my perspective,” he said. “I know there’s talk about a crypto winter and reduction in valuations, but there’s still inquiries from people wanting to do business and set up here, and wanting to find out how to establish themselves here.

“I think the people involved in the crypto industry see the so-called crypto winter as a temporary thing. They don’t see it being long-term or permanent. They are planning for the long-haul. There will be dips. I still see The Bahamas as being a place of interest for crypto inquiries. 

“Yes, we see the crypto winter, but that has not stopped people from calling me, e-mailing me, about operating in The Bahamas, the regulations and the requirements for setting up in The Bahamas. They’re all bullish. The people involved in it see it as a dip and, like the stock market goes down, they don’t see this as terminal.”

However, Kendrick Christie, the Crowe (Bahamas) accountant, told Tribune Business that he had seen digital assets-related inquiries “start to level off” and “certainly slow down” with market participants electing to adopt a “wait and see” attitude as a result of the recent plunge in crypto-related valuations.

Suggesting that The Bahamas cannot rely on the digital assets space as a solitary cure for all that ails its economy and financial services industry, he nevertheless backed efforts to make inroads into this niche given that the country needs “beef up” its financial services industry - the second largest contributor to gross domestic product (GDP) behind tourism - following two decades of attritional decline due to ‘blacklistings’ and other regulatory pressures.

All three spoke out after a crypto market crash that resulted in Bitcoin, the oldest such currency, falling below the $20,000 mark at one point last month – a level well below its peak of nearly $69,000, which it reached in November 2021. Collectively, the fall has wiped some $2trn from the crypto market’s total value.

The total value of all cryptocurrencies is about $1tn currently, with Bitcoin accounting for about 40 percent of the total. The decline has coincided with problems for the world economy, including the post-COVID fall-out and supply chain woes, surging global inflation and the war in Ukraine. Central bank interest rate increases have also made these investments much riskier.

The Bahamas, though, is continuing to strengthen its supervisory regime for digital assets. Michael Halkitis, minister of economic affairs, last addressing a London-based event to market the Bahamian financial services sector, affirmed that this nation has begun the process of reforming its Digital Assets and Registered Exchanges (DARE) Act and other legislation to ensure regulation keeps pace with emerging trends in this niche.

“Investors in The Bahamas can be assured that we will never rest on our laurels. We are always scanning the horizon for opportunities to strengthen existing offerings and tap into emerging niches,” the minister said. “This is why leaders in the Fintech (financial technology) industry are now making moves to establish a foothold in The Bahamas.

“In our Digital Assets and Registered Exchanges legislation, we have a world-leading regime for the regulation and facilitation of the exchange of digital assets, digital payments, digital ledger technologies and the sale of digital assets. Our financial services sector has now been launched into a digital landscape that will open the door to a range of new service offerings as the world continues to embrace the Fintech revolution.

“True to our reputation for measured innovation, we have already begun the process of drafting amendments to the existing legislation in recognition of emerging trends, such as stable coins, non-fungible tokens (NFTs) and provisions for greater consumer protections in decentralised finance.”