In May, Bermuda became the first country to pass cryptocurrency regulations. Spurred by blockchain, countries around the world are taking note but it may be those part of the Commonwealth, including small developing states, that are poised to benefit the most.
With certain differences, Bermuda law, similar to most of the Commonwealth, is based on English law. This means that the 30 Commonwealth members that are small states with a population usually under 1.5 million, and the 24 members that are small island developing states, can theoretically adopt the same legal regulations that Bermuda just passed. One way of doing this is by creating treatises of technology, so that the laws only have to be created once and can then be shared.
Developing countries are where blockchain and regulations have the biggest potential to take off, Loretta Joseph, who is the chair of the advisory board of the Australian Digital Commerce Association and is working with the Bermudan government on cryptocurrency regulation, told Devex: “That’s because in developing countries, especially the small ones, there’s enough room to innovate, whereas it’s very hard to change laws in developed countries.”
Joseph has been working with the Bermudan government on this project since January, after she and a group of blockchain enthusiasts were asked by the country’s premier, David Burt, at the World Economic Forum in Davos, Switzerland, to fly to Bermuda and advice on the regulations.
“I’ve been in this space since 2013 and in global financial services for over 25 years, and I’ve never seen a startup move this quickly — let alone a country,” she said, adding that what makes Bermuda different is its strong political will and openness to collaborate among regulating banks, policymakers, and the government to create a strong act.
The launch of the World Identity Network may have taken place at Sir Richard Branson’s private luxury island, but the aim is to benefit the 2 billion people living without recognized identification documents.
Still, blockchain is not for every developing country cautions Joseph, nor would they all benefit in the same way. What a developing country needs is a strong system that can harmonize laws and regulations. This is especially important in order to create and encourage the blockchain ecosystem, while setting high standards to keep out nefarious activities such as money laundering and terrorism.
For instance, in Bermuda, which has some of the world’s strongest legislation in these areas, a proposal has been put forward to increase the fine to up to $10 million per breach for people and companies caught carrying out illegal activities.
Bermuda keeps on innovating, and is setting itself up to be a global leader in the financial technology space. It recently passed a digital assets act, which regulates cryptocurrency wallets and is now looking into electronic identification legislation — all of which could one day, with the right momentum, spread through the Commonwealth’s roughly 2.3 billion people.
“Collaboration is the new survival,” said Joseph. “We are all in this together.”