By YOURI KEMP
Tribune Business Reporter
THE Securities Commission’s top executive yesterday said “serious” digital assets providers wanted to operate in a well-regulated jurisdiction and did not need “sandboxes” to facilitate their innovation.
Christina Rolle, the regulator’s executive director, speaking at a seminar organised by the Ministry of Financial Services, Trade and Industry and Immigration, explained that industry needs drove The Bahamas away from the light-touch regulatory model that “sandboxes” represent.
A sandbox is an isolated—but fully functional—testing environment where software, apps and programs can be tested. If a programmer writes a new piece of code, they can use this for testing since it is effectively sealed off from all other systems and users.
But Ms Rolle said: “I just want to address this issue of the sandbox, and address the reason the Securities Commission decided to go down the road of developing legislation.
“First, I think we need to understand what a sandbox is from a regulatory point of view. It is a framework that allows businesses entrance into the sandbox to operate in an environment that is overseen by the regulator, but it is not directly regulated.”
Describing a sandbox as a “non-regulatory environment”, she added that when the Securities Commission looked at the issue and “benchmarked” best practices, “serious operators were not interested” in what some would call “regulation light” but a proper regulatory framework.
Ms Rolle’s stance disagreed with that of Grace Lindo, partner with the Jamaican law firm Carter Lindo, who said regulatory sandboxes have worked in “quite a few” jurisdictions.
She added: “I think in jurisdictions such as ours, and when I say ours I mean our entire Caribbean region, we are always looking over our shoulders at what the OECD (Organisation for Economic Cooperation and Development) may think, or what other international regulators think when it comes to AML (anti-money laundering) and the persons we allow in our sector.”
Ms Lindo argued that using so-called sandboxes will allow jurisdictions across the Caribbean to strike a “balance” when it came to oversight of new persons and start-ups that come into the digital assets space.
Yet Ms Rolle said: “You will notice that one of the things we did not do with DARE (the Digital Assets and Registered Exchanges Act) is that we did not put out any regulations, and the reason for that is that regulations are very, very prescriptive.
“They sort of box you in to positions, and so the reason we decided on just a framework with the Act and no regulations is because we wanted to allow that flexibility that could be achieved in a sandbox environment. Then the regulator would have broad discretion to address certain things, whether through policy but with without such a prescriptive framework.”