“Building Trust in a Web3 World“
And welcome to D3 Bahamas. Thank you for joining us today. For those of you who joined me for dinner last night, it’s good to see the food has settled and the wine has worn off. I’m still full by the way!
To those who are visiting, I do hope that you take a moment to experience our rich culture, delicious cuisine, and friendly people during your stay. We are world-famous for our sun, sand, and sea, but it is the warmth, hospitality, and strength of our people that is our greatest asset.
Tourism is our number one industry. You may be familiar with our Ministry of Tourism’s slogan, “It’s Better in The Bahamas” – now, I may be a bit biased, but I can assure you that there is a lot of truth in that statement.
Over our past 50 years as an independent nation, our journey from having a few scattered fishing villages and a seasonal tourism product to becoming a regional tourism leader has been remarkable. Our growth is a testament to the talent and ingenuity of Bahamians.
During that same period, we emerged as a leader in providing banking and wealth management services.
Today, financial services is our second largest industry. So, it is no coincidence that we now find ourselves here discussing the future of Web3 and Fintech. The Bahamas has been leading the way in financial services for decades as a compliant, innovative jurisdiction with arguably the most financial services talent per capita in the world.
As a small island developing state, to remain competitive, innovation must be at the heart of our approach. The very survival of our financial services industry hinges on our ability to innovate and adapt to emerging trends. Our embrace of Fintech and DeFi advancements is a natural next step in the evolution of our financial services sector.
Last night at dinner after my toast, I was reminded by a guest at my table that The Bahamas is a pioneer in the digital asset space, and history has proven that pioneers did not succeed without overcoming many obstacles or, as he put it, “without taking licks”.
What are the character traits of a pioneer? Free-thinking, adventurous, spontaneous, highly creative, independent-minded, clever and original. If there is a problem, that needs a novel approach to solve it, then the pioneer will typically use an original approach to solve the difficult problem.
The Bahamas will continue to be a pioneer in the digital asset space.
Digital assets represent a remarkable opportunity for our country – an opportunity to leverage and build on our world-class financial services expertise and engage a whole new generation of Bahamians with new opportunities as we continue to lead the way as world-class innovators.
Despite the nay-sayers, the digital assets industry is here to stay.
The key to our success in the digital assets space is our commitment to developing an effective and stable regulatory framework within the context of a rapidly changing environment.
While we want to attract investors and consumers of digital assets and related services, we must first ensure that everything is being done according to the highest global standards. We understand the need to constantly adapt our regulatory framework as we anticipate long-term sectoral growth.
In 2018, our financial services providers, industry experts, and regulators saw the opportunity ahead of us and worked together to develop what became the Digital Assets and Registered Exchanges Act (2020).
At the time of its passage, the DARE Act was among the world’s most sophisticated and comprehensive frameworks for regulating the issuance, sale, and trade of digital assets and registered exchanges. Since the initial introduction of the DARE Act, the cryptocurrency world has gone through a number of changes, and in the spring of last year, we began responding to those changes with a slate of amendments that will reinforce our standing among the best-regulated jurisdictions in the world.
We are a responsive and nimble financial services jurisdiction and, as promised when DARE was implemented, we remain committed to consistently updating and evolving our regime to meet the latest threats and risks as they emerge.
The changes to the DARE Act will include – among other things – measures to clarify the regulation of stablecoins, and the introduction of more robust investor and consumer protection mechanisms, including new provisions for a single framework for the registration and oversight of digital assets custodians and the provision of custodial wallet services and requirements for the segregation of assets. We are also introducing a disclosure framework for the staking of clients’ digital assets and the operation or management of a staking pool as a business.
We expect the amendments to be tabled in Parliament shortly and passed through both chambers by the end of the year.
We are innovating and, some may say, pioneering not only in response to our experiences over the past three years, but in anticipation of where we believe the future opportunities will emerge within the digital assets space. The Securities Commission of The Bahamas is deeply involved in the work of the IOSCO FinTech taskforce, and made significant contributions to its reports on Crypto-assets and Decentralized Finance, released in May and September, respectively. Through the Commission’s work with IOSCO and ongoing engagement with other regulators globally, The Bahamas will remain a leader in the regulation of crypto-assets.
Web3 and Fintech will transform global financial systems in unprecedented ways, and the Bahamian people are positioned to be at the vanguard of this rapidly expanding frontier.
In 2020, as we finalized the DARE Act, we also launched the Sand Dollar, the world’s first Central Bank Digital Currency. As an early innovator, we are among a handful of countries in the world that are actively developing effective strategies for the rollout and integration of digital fiat currencies. It is our intention to set the pace and develop the model that others will look to when they decide to follow suit in launching their own CBDCs.
The global financial landscape is constantly evolving. Across the Caribbean and Latin America, there is a growing population of unbanked people. The Bahamas has faced its own share of challenges, as traditional financial institutions have closed branches in an effort to streamline and consolidate operations.
On some of our islands, people are forced to travel by boat or plane just to perform basic financial transactions. Our adoption of Fintech isn’t just about responding to external changes or attracting investors, it is also about providing solutions to domestic challenges. We see Fintech and DeFi as opportunities to promote greater financial inclusion throughout our archipelago and across the region.
Of course, as we develop these solutions, we must also put the necessary infrastructure in place to support growth and advancement. There are practical realities that must be addressed if we are to achieve our objective without perpetuating or worsening existing challenges.
Digital inclusion should be at the top of the agenda for any nation seeking to make its mark in Fintech.
Despite the widespread use of the internet and technology in day-to-day life, there are still many people in our societies who lack access and knowledge. They are now in danger of being left behind. This digital divide, in many ways, reflects pre-existing income and social challenges. Those who would benefit most from inclusion in digital and financial systems are often the ones who have the least access.
Web3, DeFi, and Fintech, in general, represent such great opportunities for growth – it would be a shame for the world to move forward without using these technologies to address inequity and injustice. We cannot allow this new economic reality to mature while preserving inequality. Investments must be made to close the digital divide for all people, as we expand financial inclusion efforts through emerging technologies. After all, isn’t the point of these advances for us to make a better world tomorrow than the world as we know it today?
My government is focused on providing educational opportunities to spur the growth of the domestic FinTech industry through empowering our people. The University of The Bahamas has entered into a licensing agreement with the Cambridge Centre for Alternative Finance for exclusive rights to its FinTech and Innovation academic program for qualifying full-time and continuing education students. This partnership between the University of The Bahamas, the Securities Commission of The Bahamas and the University of Cambridge will include Bahamas-specific case studies and Bahamas-specific references. Education will play a key role in preparing our people for the future.
This is critical. While there is not yet a large domestic market within the region for digital assets, we are already serving as a strategic operational hub for the Americas. In fact, OKX, one of the largest crypto exchanges in the world, and the Title Sponsor of this conference, has its regional base right here in The Bahamas – a testament to The Bahamas’ inherent jurisdictional strengths and our pioneering spirit.
We fully expect the list of investors to continue to expand as our reputation as a well-regulated jurisdiction grows.
Eventually, we do anticipate increased interest in domestic markets, as DeFi technologies become a part of everyday life.
There is a movement toward the tokenization of all asset classes. And the potential applications of emerging technologies to address some of our greatest challenges are vast. For example, here in The Bahamas, we are currently performing research on the role of our seagrass meadows in fighting climate change as a natural carbon sink. This research will lead to the valuation of our carbon-absorbing capabilities, as we take steps toward becoming the first nation in the world to tokenize this value in the form of Blue Carbon Credits. The revenue from these credits will be used to fund a climate-resilient future for our people.
The IMF has already acknowledged Blue Carbon as a new asset class and has indicated interest in purchasing our Blue Carbon credits when our registry is activated in 2024. We are exploring the best options for tokenizing and leveraging these assets. It’s an exciting time for us and we’re proud to be pioneers.
Today, we have an opportunity to learn from our setbacks and build on our successes. Within this room, we have some of the world’s best and brightest Fintech minds. Ahead of us, we have so many possibilities for transforming this world, solving our shared problems, and soaring to new heights. We must come together in the name of mutual advancement.
We are living in the era of the blockchain, AI, Big Data, and the ever-expanding Internet of Things. My government’s initial success in embracing these emerging opportunities is just the beginning. To fully harness the potential for transformation, this must just be the beginning. We are fully committed to making the necessary investments to drive the digital transformation of our financial systems, our government, our economy, and our communities.
I look forward to working together to construct a path to a mutual brighter future. Some of those discussions we need to have to get us where we need to be will happen today and tomorrow – right here at the D3 Bahamas Conference. I am so excited to see the opportunities that will emerge.