The Tribune

• Exchange ‘actively pursuing opportunities’ in space

• Aims to ‘take care of backyard’ first before outside

• Says B$ crypto access ‘inevitable’, ‘needs to happen’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas International Securities Exchange (BISX) is “actively pursuing opportunities” in digital assets, its chief executive disclosed yesterday, adding: “We’d be foolhardy to do otherwise.”

Keith Davies, while declining to provide details on what the exchange is presently developing, told Tribune Business that blockchain technology, crypto currency and digital tokens will “be a bit part of the future” for BISX with the worldwide digital assets industry having evolved into a $3trn-and-growing sector.

Unveiling a vision where The Bahamas’ first and only securities exchange will provide the “avenue”, or platform, for digital asset innovators and creators, he added that technology and investor interest had advanced to the point where BISX could play a greater role.

However, Mr Davies said his initial focus will be on the domestic market as “it’s very important to take care of your backyard” first before seeking to expand into international markets. That makes the Government’s pledge, as outlined in its ‘white paper’ policy position, of working with the Central Bank to facilitate Bahamian dollar access to digital assets extremely important to BISX’s plans - something the exchange’s chief branded as “inevitable” and “needs to happen”.

While BISX’s scale may pale compared to the likes of Sam Bankman-Fried’s FTX Digital Markets, the world’s second largest crypto currency exchange which is now constructing its headquarters in The Bahamas, Mr Davies said he had always believed that the future of capital markets - and especially securities - lay in digital assets.

“One of the things that is is very interesting for us is the level of interaction that can be pursued with digital assets, in particular digitising and tokenising securities,” he told this newspaper. “For us, I said it many years ago that the future of securities is in digital assets. To the extent we can leverage that technology for the betterment and advancement of this industry, it’s possible.

“The DARE Act (Digital Assets and Regulated Exchanges Act) makes it possible, and also the persons we are working with and in discussions with. There are a lot of avenues that can be pursued, and BISX is looking to pursue them. We are actively pursuing opportunities in that space currently.”

Mr Davies declined to provide specifics on these activities, though he indicated they are close to being finalised and presented to BISX’s Board for discussion and approval. “We’ve worked on a few things and are close on some. We are a few weeks away on that,” he added, refusing to be drawn out further.

Asked about the potential size of BISX’s digital asset market, Mr Davies pointed to its existing $9.153bn market capitalisation. That includes 20 ordinary stocks worth a combined $4.84bn; $3.5bn in Bahamas Government Registered Stock (BGRS); some eight preference share issues worth $249m; and nine Bahamas Government Stock (BGS) and corporate bonds valued collectively at $462m.

“If you can imagine all the securities we have being tokenised, digitised and traded, that’s the size of the market and goes for private, public and government,” he explained. “It’s a different way of interacting with, and dealing with, how securities operate. It’s modernising the space. 

“The next step from that, in terms of digital, is that it allows for a greater variety of avenues - be it local or international. It allows for a potentially wider audience, and provides a level of access and stability that did not exist before. For us, when we look at this space and what is eligible to be sold, what is a security and what can be tokenised. Think of how creative it can become with things that were not previously thought of being monetised. That’s the goal.

“What I love about this space is that technically, if it can be done, it will be done. It’s a function of time. There are enough creative people in this space, and we need to allow them to be creative and develop products and services. The exchange will be the avenue for them to have that level of access.”

While BISX’s traditional securities business “will always be there”, Mr Davies said the key question was: “Where can we take the tokenisation and digitisation business?” He added that the two sides will “interact” sooner or later, and said of digital assets: “I see it as being a big part of our future..

“Someone said many years ago at the beginning of the Internet and dot.com age that they could never imagine anyone buying and selling something online. It was a fad. Those persons are already probably kicking themselves and have changed their tune,” the BISX chief executive said.

“Blockchain, digital assets and crypto are there. There’s tremendous interest and focus. There’s tremendous money behind it, and technological advances. It’s in our operational and financial interests to operate in this space and see how we capitalise on it. We would be foolhardy to do otherwise. We are actively pursuing opportunities in it, and we hope to be a very active participant.”

Mr Davies said BISX was focused on digital asset opportunities at home first before any move is made to expand beyond The Bahamas’ shores. “It’s very important to take care of your backyard before you go into someone else’s backyard, so we will focus on our market first,” he told Tribune Business. “You get left out if you don’t participate. We have to be proactive in our approach. You get left out by doing nothing.” 

With Bahamian access to digital assets, especially in local currency, viewed as a major obstacle to local participation, the BISX chief said: “The point is this: It’s inevitable, and it needs to happen. We want our regulators and government to be actively thinking how it will happen and benefit the country. We need to find the answers for it to happen the right way. I applaud them for doing it, and it’s in everyone’s best interests for things to be done in an orderly fashion.”

Mr Davies spoke as Ryan Pinder QC, the attorney general, reiterated yesterday to the Senate that the Government’s goal is to establish The Bahamas as a “digital assets hub” for the Caribbean and Western Hemisphere. In so doing, he unveiled the members of the Digital Advisory Panel that will provide policy feedback to the Government and help it stay abreast of trends in a rapidly-evolving niche.

Besides himself, the other members include Gowon Bowe, Fidelity Bank (Bahamas) chief executive; Brian Jones, the Agio chief; Aliya Allen, the Graham, Thompson & Company attorney; Emmanuel Komolafe, ex-Bahamas Insurance Association (BIA) chair; Delphino Cassar; Rhonda Eldridge; Kelly Banks; and Dellarese Taylor Russell. Their role, Mr Pinder said, will be “to keep digital asset development, emerging trends and associated risks constantly under review”.

He added: “The panel will be charged with keeping the Government, the Digital Asset Policy Committee and appropriate regulators fully updated with relevant information.

“They will be expected to recommend any necessary changes to policy, the DARE Act and other legislation to ensure that The Bahamas maintains its place as a well-regulated digital asset jurisdiction, while at the same time continuing to remain relevant and attractive for digital asset businesses to operate from, to grow and to prosper.”