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Which Countries Are Best to Start Blockchain Projects?

Bitcoin’s boom has spawned more than just a digital currency revolution. Companies across the globe have explored the potential of blockchain technology in a range of different spheres, including cars, phones, and a multitude of disruptive alternatives in banking, government and as well as shipping.

Also, it is not only the small startups that are trying to push blockchain innovation, but rather conglomerates as big as Amazon, Alibaba and Microsoft. However, these companies are still trying to negotiate an ever-expanding regulatory framework that is growing at different rates across different states.

Many different companies began springing up within the cryptocurrency ecosystem, usually attached to a capital raising ICO, which left many regulators wondering how to control this decentralized, crowd-funded form of capital raising.

From the SEC to the Chinese government’s hard clampdown on ICOs to Malta and Switzerland competing to be the premier destination for fintech and blockchain, different nations have taken widely different views on how to regulate, quash or support blockchain startups.

Thus, because of the global nature of blockchain products, it is unnecessary to worry about a regional customer, but rather it is important for blockchain projects to examine the legislation, the atmosphere and approach from the community, fees, and a myriad of other factors in different countries to see which will aid them in realizing their outcomes.

Cryptocurrency havens

The different approaches by governments and regulators have created what has sometimes been referred to as ‘cryptocurrency havens’, as nations look to try to attract fintech and blockchain projects to their shores in the hope of using a potential financial revolution to boost their own agendas.

A lot of these havens are being created in smaller nations. Places like Switzerland, Malta and Bermuda are actively adjusting and creating legislation to welcome blockchain projects.

On the flipside, there are countries that are trying to discourage and scare away of as many blockchain projects as they can, and it has been successful in many cases. One of the most notable examples is China, where the ban of ICOs and access to exchanges has forced these startups and digital currency exchanges to go elsewhere.

For example, one of the globe’s biggest exchanges, Huobi, which was forced to leave China in September last year because of legislative changes. Since then, the exchange has looked to open offices in a number of other different locations, such as Australia, the United States, Singapore, South Korea, the United Kingdom and others.

While not all of these countries are actively supportive of cryptocurrencies, they are at least tolerant and are looking to set their rules to make it easy for companies to follow the legislation.

Importance of a regulatory framework

While regulations are often frowned upon by those who have spent some time in the blockchain space, they are a necessary part of the evolution of the technology. Some companies have gone from having free rein — building their company up with no restrictions — only for the legislature to catch up.

However, some companies are appreciative of building their blockchain company in a space that is regulated and has easily defined boundaries to follow.

One of the first countries to begin building a regulatory framework for blockchain projects — and a crypto-friendly framework — was Switzerland.

Switzerland – Crypto Valley

The U.S. may have Silicon Valley, but Switzerland wants to have the 2.0 version — Crypto Valley — in the small town of Zug. However, even before Zug started turning its full attention to cryptocurrency, Switzerland was working toward becoming a fintech sandbox.

In July last year, Switzerland put in place options for companies that accumulated around $1 million in third-party funds to test out their innovative financial technology ideas without the usual regulation surrounding finance and digital currency.

They also said that banking licenses would be re-evaluated in order to allow these companies earning less than $1 million to obtain licenses for depositing and allowing crowdfunding donations to be withdrawn over a period of 60 days rather than the previous seven days.

In the year since Switzerland started making life easier for blockchain and fintech companies, there has been a big boom in these innovative projects.

Stephen Meyer, a legal professional and Ph.D. Candidate in Blockchain & Law living in Zurich Switzerland, has seen both the advantages and disadvantages of launching a blockchain project in the small European nation:

“Switzerland has a very clear regulatory situation based on the Swiss financial authority FINMA’s ICO Guidance of February 2018. Also, one of the major benefits is the possibility of receiving an individual pre-ruling by FINMA. Every crypto team can describe its project, send it to FINMA and will usually receive within 4-8 weeks a clear statement whether regulatory provisions are applicable.

“Instead of creating new blockchain-related legislation, which — as with every new legislation — leads to uncertainty regarding the specific application, Switzerland applies the existing regulatory framework, but with a flexible and principle-based approach.”

ICOs are also nothing new in Switzerland, as they have seen the Ethereum Token Generation Event back in 2014 and have been gaining experience ever since.

“FINMA and the tax authorities have longstanding experience with crypto projects since the launch of the Ethereum TGE in 2014. In the meanwhile, they have handled a substantial number of ICO as well as more and more other crypto projects as exchanges and funds. Therefore, as a crypto team, you do not have to explain blockchain technology to these authorities, and they usually are up-do-date,” said Meyer.

Valentin Botteron, Swiss attorney currently visiting scholar at Columbia Law School in New York, completing a Ph.D. in Antitrust as well as research in blockchain and smart contract-related legal matters. He had similarly positive things to say about Switzerland’s approach:

“Switzerland has a very tech-friendly approach on regulating the fintech companies, ICOs and cryptocurrencies. The Government has already stated several times that it aims to make Switzerland a regulatory-friendly place for blockchain companies. Switzerland hosts several blockchain companies and associations who advocates for a healthy regulation of the technology.

“The parliament is well aware of the phenomenon and urges the government not to miss the opportunity to be amongst the first countries to attract blockchain-related actors. The political stability of Switzerland makes it an ideal place to develop business in general. Besides the economic actors, several scholars conduct research in economics and law about blockchain in Swiss universities.”

With a look at what Switzerland is doing, and then seeing how other nations are trying to replicate and advance it, there is this feeling of competition. As Botteron states, Switzerland’s parliament is pushing the government to be the leader in blockchain growth.

Mighty Malta

The biggest competition to Switzerland in terms of attracting blockchain companies is probably the small Mediterranean island of Malta.

A look at the cryptocurrency headlines surrounding Malta shows some impressive growth for blockchain and fintech on the island. The biggest vindicator was probably when Binance, the world’s biggest cryptocurrency exchange, decided to open an office in Malta due to building regulatory pressure in Japan.

However, since then, there has been an impressive level of growth for ICOs and blockchain projects.

The Maltese government put forward a legal framework for distributed ledger technology (DLT) as of March 12, which included three crypto-positive bills. These include: Malta Digital Innovation Authority (MDIA) Act, Innovative Technology Arrangements and Services (ITAS) Act, and the Virtual Currencies (VC) Act.

The result of these positive pieces of legislation has seen a flood of interest in Malta as a premier destination for blockchain and ICOs.

Other exchanges — including OKEx —  have moved there, as well as Polish exchange BitBay. The positive regulations for virtual currencies are clearly being gratefully accepted, but even the smaller blockchain projects are cashing in too.

Jonathan Galea, a graduated lawyer in Malta, president of Bitmalta and managing director at Blockchain Advisory, spoke to Cointelegraph about what makes Malta different from other countries.

“What distinguishes Malta from the rest of other jurisdictions when it comes to blockchain and cryptocurrencies — put simply — is the fact that the government, the opposition and all regulatory authorities are pulling the same rope together, chasing one single vision: making Malta one of the leading countries in the space. That, coupled with the ease of accessibility to top officials in relevant positions that are there to promote and aid business activities rather than to hinder it, makes Malta an attractive destination for all blockchain-related matters.

“Of course, one cannot not mention the regulatory framework that has been devised in the span of less than two years, following various consultations with various important stakeholders in the crypto sphere — both locally and internationally. The creation of the first ad-hoc, comprehensive framework in the world, catering for the legal, technical and financial aspects of blockchain and crypto-related activities, grants absolute legal certainty and peace of mind to those wishing to operate within a completely regulated ecosphere — which, at the same time, promotes rather than restricts business growth.”

Cryptoindex is such a blockchain project that has benefited from the Maltese regulatory stance, as CEO VJ Angelo explains just why it is important to get the financial regulations right in this space.

“For a company like ours,” Angelo told Cointelegraph. “We chose Malta as its location for the business headquarters because it became an early incubator for the crypto industry and, as a result, has been looking at its long-term impacts long before most other regions.

“In passing the Virtual Financial Assets Act in June of this year and creating the Fittest for classification of the various cryptocurrencies and tokens, the Malta Financial Services Authority took the lead in Europe. A great deal of the Act has been mapped to MiFID II, meaning the Europe-wide regulations have been carefully considered in their new laws. While it does not entirely solve the concerns of a different approach by other regulators in Europe and beyond, the use of existing regulation does mitigate some of the risk.

“The Maltese approach has been very much one of fostering all the opportunities for growth and development in the crypto market, while putting protections in place to cover ICO participants and ensure a dramatic reduction in the stories of fraud and scams that have prevented many new adopters of crypto.”

While both Malta and Switzerland are striving to make the most open and inviting environment for blockchain projects, there are other nations that realize the potential of the technology, but have strict laws governing finance and money, as well as securities.

Freedom, liberty and securities in the U.S.

The U.S. is a major player in both the cryptocurrency and blockchain ecosystems, with the majority of ICO projects from the last 18 months originating in the U.S. — 16 percent of all global ICOs.

However, the U.S. has been fighting a big battle with ICOs thanks to its Securities Exchange Commission’s definition of what a newly founded virtual currency can be classified as.

The SEC, however, found that, in a major precedent-setting decision, that the decentralized autonomous organization (DAO) tokens that were issued in 2016 were securities. This essentially lumped the majority of ICO projects as securities and put them under the scrutiny of the regulator.

But that does not mean that the U.S. is closed off to ICOs and blockchain projects, rather there are some harder hoops to jump through — especially with the division of state and federal law.

Jack Keating, an attorney in New York and a former regulator at the Financial Industry Regulatory Authority (FINRA), spoke to Cointelegraph about the challenges that ICOs and blockchain projects face in the U.S., and particularly in New York State.

“The biggest problem with ICOs is that many of them are being done in clear violation of U.S. securities laws. Whether the issuers are unaware or agnostic to the potential consequences of issues unregistered securities, without a exemption from Section 5 registration. Many ICO issuers have ignored the requirements of the raising capital in the U.S.

“[For] ICOs that do comply with the SEC Rules and U.S. securities laws, investment is often limited to accredited investors. This goes against one of the core tenets of many Bitcoin and blockchain evangelists, that being that this technology can democratize wealth. Unfortunately, when investment is limited to accredited investors, the rich get richer and the non-millionaires are left on the sideline.”

There is a path for ICOs to function in a popular ICO country, but the regulatory hoops go against the core values that the crypto community holds dear.

“Another challenge is banking solutions for crypto companies. Similar to how marijuana companies are blackballed by most financial institutions, many U.S. banks have a policy to not open accounts for crypto businesses. Because a bank account offers so many fundamental services to running a company, simply opening a checking account can be extremely difficult. Of late, Metropolitan Commercial Bank has professed its leadership in the space. However, they face heavy scrutiny from U.S. regulators, which challenges their sustainability.”

Keating concluded that it may not be the most welcoming place for blockchain, but the U.S. seems willing to foster the technology, and because of the hunger, it is worth it.

“In my opinion there is a lot of support for crypto and ICOs coming from the government. Whether they see value in it or are willing to foster the technology is hard to say. The lack of an outright ban is encouraging. It’s worth the pressure. The U.S. has the best investor base and the best courts in the world.”

The United Kingdom’s definition of an ICO token

With the likes of Switzerland and Malta setting firm and understandable definitions for crypto, ICOs and blockchain, the U.S. — as well as the United Kingdom — have far more ambiguous regulations about different aspects of the ecosystem, as they continue to decide how much, or little, they need to step in.

Romal Almazo, the cryptocurrency lead and principal consultant at CAPCO — a global business and technology consultancy in the U.K. — explained to Cointelegraph how the law is working around cryptocurrencies and ICOs in Great Britain.

“In the U.K., the FCA [Financial Conduct Authority] still does not regard cryptocurrencies to be a currency or a commodity under MiFID II. They do, however, admit that some firms will be regulated where they offer products or service which are caught under existing financial regulations — e.g., Bitcoin futures. Where firms offer ICO tokens, they also concede that some firms might be issuing a regulated security. For a token to be regulated as a security under the U.S. Securities Act of 1933, a firm should look to the ‘Howey test’ and the ‘U.S. Person’ test.

“Looking forward, there are still huge problems on agreeing what crypto assets are and how they behave. Is it an equity, commodity, currency, utility asset or some kind of hybrid? Until this taxonomy becomes clearer and universally agreed upon — which is unlikely in the near-term —  competitive advantages between states and jurisdictions will emerge. For example, we are already seeing Malta <…> leading the pack by offering guidance and regulation. They want to create a blockchain island of innovation. The U.K. is still looking promising, but we are still seeing the majority of ICOs in the U.K. set-up through Malta, Gibraltar, Liechtenstein or Switzerland.”

Budding smaller nations

Others — such as Bermuda, Estonia and Liechtenstein — are also doing their best to wrest some crypto authority with their own friendly regulations.

Bermuda has recently — on July 2 — put forward plans to make amendments to the Banking Act in order to establish a new class of banks that offers services to local fintech and blockchain organizations.

Estonia is one of the countries that has actually been trying to make blockchain feel welcome for some time now. The government even went as far as to digitize its services by using blockchain technology. This appreciation of the potential of blockchain has made it easier for startups to build their own innovative projects.

John Smirnov, CEO of Block-chain.com, explained how Estonia’s reputation of a digitalized and forward-thinking country made it easy for them to register in Tallinn, the country’s capital.

“Timing was also crucial for us when we made a decision [of] which the country to start our company in. Estonian law is very user-friendly for blockchain projects that are holding all activities in cryptocurrency. That is why we are registered in Tallinn. It took us about a week to complete the process of company registration.

“With most regulators making some form of comment or direction for the present looking to the future of crypto, there are few actually enacting any laws. The crypto market is in the midst of an important transition. The likes of the SEC have made sweeping statements — catching the whole market in a difficult position, as far as the U.S. is concerned. Others merely state they don’t currently regulate crypto but will be announcing something soon, like the U.K.’s FCA.”

Still space to pick and choose

It is clear that there is certainly no global standard, which allows companies to pick and choose the places that are most suited for them.

The G20 might be looking to gathering data about cryptocurrencies in order to potentially put forward a united force for regulations, but it sounds like it still has a long way to go — and is not even guaranteed that everyone will agree.

However, what is clear, is that there are countries that are striving to let Blockchain flourish. A few islands, like Malta and Bermuda are changing their legislation to make their country more attractive to fintech companies, and other European Nations, like Switzerland and Estonia believe that they have the right laws to protect against the negatives of crypto while still encouraging its growth.

The UK and the USA have adapted their rules to encompass cryptocurrency into standing legislation, and while it seems quite stringent at the moment, it is a working system. In the end, there is no one place that is offering total freedom for blockchain projects, but along the spectrum, there is a lot of options for innovation.

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Bermuda's Blockchain Strategy Goes Beyond Just Winning New Business

When it comes to regulating the blockchain industry, size really does matter.

Government size, that is, according to the Bermudian officials driving the island’s regulatory efforts around the nascent technology.

“Small ships can turn quickly. That’s the beauty of Bermuda,” Premier David Burt told CoinDesk.

Bermuda is one of several small territories and microstates striving to leverage their nimble governments to attract blockchain and crypto businesses by creating regulatory certainty where other, larger governments have failed to deliver thus far. Liechtenstein, Malta, Gibraltar and, most recently, San Marino have joined the race alongside Bermuda, all offering proposals – and in some cases formal legislation – that promise “comprehensive blockchain legislation.”

Typically such schemes entail detailed guidance on how initial coin offering (ICO) tokens will be viewed; secondary market controls; investor and consumer protections; and anti-money laundering (AML), know your customer (KYC) and counter-terrorist financing (CTF) measures.

And to date, Bermuda’s strategy has proved fruitful.

Since launching a blockchain task force in conjunction with the Bermuda Business Development Agency (BDA) in late 2017, the government has passed legislation on ICOs and created a regulatory sandbox for those companies, put forth a Digital Asset Business Act and partnered with BitFury to shift the island’s property deeds system to the blockchain.

But most recently, and perhaps most notably, the U.K. territory inked a $15 million investment agreement with major crypto exchange Binance, demonstrating that the tiny island’s blockchain push is attracting real industry heavyweights.

This result is one reason, Burt argues, that Bermuda stands apart from its peers.

“We have a very simple mantra in my government, and it’s ‘show, don’t tell,'” Burt said.

But with the competition here fierce, Bermuda is attempting to diverge from other places luring crypto and blockchain startups by moving beyond regulation, and incorporating its blockchain aspirations into its own public policy agenda – including re-envisioning its youth education and immigration policies.

With this, Burt said:

“We believe over the last nine months that our government has shown that not only are we open for business, but we mean business.”

The old with the new

Understanding Bermuda’s blockchain strategy, and more importantly, what sets it apart also requires a historical view.

One feature which distinguishes the island from other aspiring hubs precedes the blockchain entirely – Bermuda’s multi-billion dollar insurance and reinsurance industries which have “full regulatory equivalence” with both the U.S. and the EU.

The maturity of these industries means that there are existing robust investor protection measures and other pertinent rules that regulators have been able to build on to create the Digital Asset Business Act, explained Sean Moran, head of business development at the BDA.

“We’ve had to tweak them, of course, to make them appropriate and fit for purpose for this industry,” Moran told CoinDesk, “but we have a model that we can work from that takes all of those protections and disclosures into account, and that’s what we’re working from.”

The dominance of Bermuda’s reinsurance and insurance industries has also resulted in a burgeoning compliance-oriented sector, which Burt envisions as a critical resource for the blockchain businesses he hopes to attract.

“If you cannot meet, match the Bermuda standards, if you cannot pass our high bar, then we don’t want you,” Burt said.

He explained that part of creating desirable regulatory conditions is implementing high compliance standards for companies that are made in consultation with industry players – like Binance, for example.

“That is squarely in our sweet spot,” Wayne Caines, Bermuda’s minister of national security, told CoinDesk.

More than a haiku

And that sweet spot will be especially beneficial for ICO issuers and the various stakeholders of that burgeoning industry. While industry has been waiting with baited breath for the U.S. Securities and Exchange Commission (SEC) to come out with formal guidance – since it was revealed that the regulator was closely investigating ICOs – Bermuda regulators have already set up a framework for those companies.

The territory will not only require ICO issuers to scrutinize potential investors, but Bermuda itself will also scrutinize the issuers by requiring them to outline beneficial ownership structures and to create more robust white papers.

According to John Narraway, an emerging technologies consultant at the BDA, this is particularly helpful since:

“The regulations around what must be in an offering document or a white paper is critical because a white paper can be something like poetry or a haiku.”

He thinks this collection of standards will greatly mitigate the potential for Bermudian blockchain companies to engage in fraudulent activities.

And these regulations were also based off an existing regulation, the Companies Act, that officials merely tweaked.

“We’ve kind of billed this as, if you will, the greenhouse off the side to start growing new things, but using the main house of structure and reputation with the success of the thing and the clarity that’s going to come from that,” John Narraway, emerging technologies consultant at the BDA said of the amendment.

Yet, those leading Bermuda’s blockchain efforts are also cognizant of the industry’s proclivity for rapid change, and believe their regulations are prepared to accommodate it.

“Think of it like software versioning,” Narraway suggested. “We know it’s not going to be 100 percent perfect, but it’s going to be as best as it possibly can be. If we can go from whiteboard to legislation in two months, how long is it going to take us to issue a ‘patch’ – to use software terminology?”

He added:

“We’re going to have [version] 1.1 probably pretty quickly because we’re going to be listening to the industry.”

Involving the locals

Likewise, another means by which the government plans to keep pace with the industry is by keeping communication lines open with the major industry players, and making sure to keep the island’s citizens in mind.

For instance, the memorandum of understanding between Bermuda and Binance stipulates that the crypto exchange will not only move its compliance center to the island, but also invest $10 million into blockchain-related educational programs and $5 million in blockchain startups over the course of two to three years.

In return, Bermuda will work to provide a steady talent pool for the company.

“We want to do it because we want those players and others to come into the market and create economic activity,” Burt said of the deal.

Echoing Burt, Narraway said, the arrival of such companies can bring Bermuda up to speed with the industry by converting and capitalizing on local talent, and ideally abet the island’s “brain drain,” whereby highly-skilled locals move to other places where the market for such talent is more competitive.

“We want to be able to pull [young people] back in and give them opportunities, real opportunities, to participate in the economy and to grow it and to develop their careers,” Narraway said.

According to Burt, the Bermudian government is in talks with other heavyweights from “the entire space,” though he declined to identify them. The officials plan to release further information on industry partners and legislation in upcoming weeks.

Narraway thinks local startups also stand to benefit, particularly because the industry presents new possibilities for raising early stage capital, which is in short supply on the island.

“I can tell you from the business development side, we’re having meetings every week with companies that are saying, ‘I think I’m going to do this startup, this is where I want to go,’ and now they’re saying, ‘explain to me this ICO as an option for doing my first round of funding,” he said.

Narraway concluded:

“So I think this is a huge opportunity for the local companies and local entrepreneurs in Bermuda.”

Minister Wayne Caines, John Narraway, Premier David Burt and Sean Moran image by Annaliese Milano for CoinDesk

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Binance, Bermuda Ink $15 Million Crypto Investment Agreement

Binance plans to set up its new global compliance center in Bermuda over the next few months, Premier David Burt has announced.

Speaking at a joint press conference on Friday, Burt announced that a memorandum of understanding has been signed, under which the Binance Charity Foundation will put $10 million toward educational programs related to the tech. An additional $5 million will be invested in blockchain startups.

On top of that, Binance will help the Bermuda government develop a regulatory framework for cryptocurrencies and blockchain, as well as establish a new office in the country.

Burt said during the press conference:

“Through this partnership, Binance proposes to develop its global compliance base here in Bermuda, creating at least 40 jobs in Bermuda with at least 30 jobs for Bermudians … [and] as soon as practical, develop a digital asset exchange in Bermuda subject to all required legal and regulatory processes, and finally, work collaboratively with the government of Bermuda and all necessary oversight agencies in the development and improvement of the robust legal and regulatory framework.”

Binance CEO and founder Zhao Changpeng said Bermuda’s government and regulatory bodies “are one of the most approachable on the planet,” and said his company would “commit to helping the local economy.”

The exchange has already begun working with a local law firm to ensure the startup’s new office would be compliant with relevant laws, he added.

During the press conference, Zhao also addressed the recent lawsuit filed against Binance, noting that “the Hong Kong high court has already rejected it and ordered Sequoia to repay our legal fees.”

In his closing remarks, Burt also mentioned the new legislation Bermuda intends to pass regulating initial coin offerings. Burt claimed that Bermuda intends to “comprehensively govern” initial coin offerings that are conducted within the country’s borders.

“We want to ensure that Bermuda is the world’s number-one place for regulation inside of this space. We have a reputation to protect,  we will protect it but we will work with all persons who we believe represents future growth for the people of this country and future opportunities and jobs,” Burt said.

Premier David Burt; Changpeng Zhao image via Bernews

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Bermuda Wants Crypto Regulation to Fuel 'Phenomenal' Business Growth

The Bermuda Monetary Authority (BMA) is seeking public feedback on an anti-money laundering act that would capture cryptocurrencies.

In a newly released consultation paper published Thursday, the Caribbean financial regulator said it is aiming to capture a wide range of cryptocurrency-related activities under the local law in a bid to prepare a more formal framework that would attract and foster cryptocurrency businesses.

The suggested virtual currency act would mandate that cryptocurrency exchanges, wallet services, payment providers and businesses that promote and facilitate token sales and initial coin offerings, collect and retain customer information. Notably, regulation on ICO organizers is not part of the proposed act. Instead, the paper indicated that supervision over ICOs would fall under the scope of a separate rule.

In this way, government officials said that the proposed rules are not meant to prohibit the nascent industry in Bermuda. Rather, it’s a move that seeks to develop a comprehensive framework that would offer cryptocurrency businesses a safer and stable environment.

According to a report by local media out the Royal Gazette Thursday, Bermuda’s Minister of National Security Wayne Caines, who introduced the paper at an event with entrepreneurs, said the industry needs a well-rounded regulation before it can flourish.

Caines told attendees:

“We can’t keep up with the amount of people who want to come to Bermuda. We’re going to London at the weekend and we have 20 companies lined up to meet us. It’s actually phenomenal.”

In fact, through the proposal, the BMA is also exploring a sandbox-like licensing scheme that would give promising blockchain startups access to the market in a regulated environment.

Elsewhere in the report, the minister indicated a proposed law related to regulation on ICO activities is to follow the money laundering act, which, according to a previous report, is being drafted by the country’s Finance Ministry.

Bitcoin and Bermuda flag via Shutterstock

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Bermuda Drafting ICO-Friendly Legislation to Draw Crypto Businesses

A move toward ICO regulation is underway in Bermuda, the premier of the British Overseas Territory said last Friday.

David Burt, who is also the minister of finance, provided an overview of a draft bill to the parliament’s House of Assembly, saying that legislators will take a “measured approach” to regulating the crypto industry in order to make the island “a global leader in the fintech space.”

“Bermuda has an opportunity to become a global leader in the Fintech space by being one of the first countries in the world to specifically regulate ICOs,” he said, adding:

“The proposed regulatory framework will provide legal certainty to companies looking to conduct ICOs in Bermuda.”

The proposed bill would designate ICOs as “restricted business activities,” and would require issuers to obtain consent from the minister of finance before starting operations.

Burt said the application process would require the disclosure of information about the company, the digital asset being issued and “the rights of the purchaser to assist the public in making informed decisions about participating in any proposed ICO.”

Wayne Caines, Bermuda’s minister of national security, will lead the legislative initiative. The government has also formed a Legal and Regulatory Working Group that includes MP Michael Scott, who was previously the island’s attorney general, officials from the Ministry of Economic Development and Tourism and the Ministry of Finance, and individuals from private sector banking and legal institutions.

Bermuda’s proposed ICO legislation will not be a wholly new regulatory framework, the premier explained, and instead will take the form of amendments to the Companies Act 1981 and the Limited Liability Company Act 2016. Likewise, other existing legislation will continue to apply to ICOs where appropriate, including securities laws.

The government is also consulting with the Bermudan Monetary Authority on additional legislation dealing with digital asset companies.

By creating an environment of regulatory certainty for ICO issuers, Burt said, Bermuda could reap a range of economic benefits, including the migration of new companies, jobs and capital to the island, as well as additional government revenues.

Implementing ICO rules would also reduce the risk of cryptocurrencies being used for “cybercrime, consumer fraud, money laundering and terrorist financing,” he said.

The draft bill is expected to circulate soon, and following a consultation period, will be passed to parliament for deliberation “at the earliest opportunity.”

Bermuda has been involved in the crypto space since 2017 when it launched a blockchain task force. In January of this year, Burt said at the World Economic Forum that Bermuda may use the blockchain to revamp its property deeds system.

Bermuda Parliament image via Shutterstock

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Bermuda Could Launch a Blockchain Land Registry

Bermuda plans to migrate its property deeds system to the blockchain, its premier said today.

As quoted by The Royal Gazette, premier David Burt remarked during an appearance at the World Economic Forum in Davos that the country was aiming to shift away from its “old school” system of recording deed information.

The Royal Gazette quoted Burt as saying:

“Bermuda has an old school deeds-based property system. What we are going to do is transfer our registry to the blockchain. Clearly it needs to be transparent so people know what’s there and be secure, and that way we know who owns what at any point in time”

Burt reportedly remarked that some segments of Bermuda’s business ecosystem – namely the legal profession – may not be fully supportive of the move. That said, according to the premier, “the thing is to make more efficiencies inside of our economy.”

The development reflects Bermuda’s continued engagement with the blockchain and cryptocurrencies.

In November, the British overseas territory set up a task force seeking to both create an appropriate regulatory environment and to support commerce utilizing these technologies in the hopes of attracting new industry and jobs. The government is also working with organizations such as Ambika Group and the Bermuda Business Development Agency on possible uses of the tech.

Bermuda flag image via Shutterstock

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Government of Bermuda Launches Cryptocurrency Task Force

The government of Bermuda has launched a blockchain task force to foster cryptocurrency commerce in the British overseas territory.

Announced by by the island’s premier, David Burt, and national security minister, Wayne Caines, during a press conference on Wednesday, the new working group has been set up to advance Bermuda’s regulatory environment for tokens, “tokenised securities,” cryptocurrencies and initial coin offerings (ICOs).

The task force comprises two groups – the Blockchain Legal and Regulatory Working Group, and the Blockchain Business Development Working Group – which will work to assist development of the technology, a press release states.

John Narroway, chair of the Blockchain Business Development Working Group, said:

“There are significant opportunities in the sphere of cryptocurrency, but that window is getting smaller and moving faster than ever before.”

Narroway continued to say that the working group is examining various opportunities in the cryptocurrency ecosystem and “zeroing in” on the “key” areas for further action.

Additionally, the Bermuda Business Development Agency (BDA) has partnered with the government to expand the initiative.

According to Ross Webber, CEO of the BDA, the move aims to bring new business to the island, help boost GDP and open up more job opportunities.

Premier Burt further revealed plans to launch a regulatory framework for distributed ledger technologies (DLT) that would launch in early 2018. He said that Bermuda “is considering a complementary regulatory framework covering the promotion and sale of utility tokens, aligned with the DLT framework.”

Bermuda image via Shutterstock

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