Despite some pushback from opposition party members, The Companies and Limited Liability Company (Initial Coin Offering) Act successfully navigated Bermuda's House of Assembly on April 27, 2018. The new FinTech legislation is expected to create a regulatory framework for ICOs and take advantage of "significant interest" in Bermuda by players in the crypto community.
"With this Bill, this government has chosen to be bold and take a significant step in the world stage," said the Progressive Labour Party's David Burt, Bermuda's premier and minister of finance. Burt said he hopes the legislation will help to build the FinTech industry and economy on the island, and that the intention is to bring "better career opportunities and more income to Bermudians."
The minister of national security, Wayne Caines, believes Bermuda's reputation for successful regulation makes it an ideal location. "The reason the world is becoming so energised about being in Bermuda is not blockchain. They are excited because we do things to a very high standard," said Caines.
Opposition came in part from Grant Gibbons, shadow minister of economic development and a member of political party One Bermuda Alliance, who had concerns about the details and lack of economic impact assessment. Gibbons pointed out the speculative and risky nature of ICOs, his concerns about Bermuda's reputation, and that "a lot of regulators have taken a pretty strong approach to this."
Burt struck a more optimistic tone and told reporters that this bill was the "first step of a number to come." Merely one hour prior to its passing, Burt announced the signing of a memorandum of understanding (MoU) between the country and prominent cryptocurrency exchange Binance.
CEO of Binance Changpeng Zhao has recently been in the news, having agreed to support both Uganda's economic transformation and Togo's "4th industrial revolution."
The MoU between Bermuda and Binance establishes up to $15 million worth of funding for educational programs related to FinTech and blockchain startups. Binance will fund university-level training in blockchain development and compliance for citizens of Bermuda via the Binance Foundation. It will also invest in blockchain companies in Bermuda through Binance Labs.
"We think the Bermuda Government and regulatory body are one of the most approachable, most reasonable and most forward-thinking bodies on the planet," said Zhao.
Research by Morgan Stanley bank published in a Business Insider report on Sunday, April 29, 2018, concludes that Malta now accounts for the largest proportion of cryptocurrency trading in the world by volume, followed by Belize. It attributes this to Malta's well-defined regulatory framework. Binance moved to Malta in March and rival exchange OKEx is registered in Belize.
It appears that Bermuda is seeking to replicate Malta's success as a base for digital innovation. The MoU confirms that Binance plans to create a Digital Asset Exchange in Bermuda as soon as is practical. Bermuda's regulatory push is likely connected.