By YOURI KEMP
Tribune Business Reporter
BAHAMIAN regulators yesterday warned that digital assets remain “volatile” despite having significant potential to transform this nation’s financial services industry.
Christian Adderley, the Securities Commission’s manager of policy and compliance, told a seminar organised by the Ministry of Financial Services, Trade and Industry and Immigration that digital assets have yet to achieve sufficient scale to enable them to be used in daily transactions.
“Today, FinTech (financial technology) is profound, and has the potential to facilitate the launching of revolutionary products and improve access to capital for many businesses,” he said. “However, despite all the promise of digital assets, they’re still volatile, and users can still be saddled with unpredictable transaction costs when using them.”
As a result, Mr Adderley said digital assets have “not yet amassed sufficient scalability” to use in daily transactions despite their growing popularity. He spoke as Securities Commission executives promoted the benefits of the recently-passed Digital Assets and Registered Exchanges (DARE) Act.
Christina Rolle, the regulator’s executive director, said that the Act accomplishes “critical things”. It “defines what constitutes digital asset business, and hence would trigger registration under DARE”. The legislation also includes provisions for “distributed ledger technology platforms” that will aid the offer or sale of digital assets.
She added: “Related to this, DARE requires digital asset businesses to have systems in place to prevent, detect and disclose money laundering, terrorist financing and suspicious transactions, and subject them to the requirements of the Proceeds of Crime Act 2018.”
Ms Rolle warned, though, that: “Non-fungible tokens, electronic representations of fiat currency, security tokens and certain other types of tokens are expressly exempted from the Act.”
And Mr Adderley said: “An important opportunity that the DARE Act provides is to develop a digital asset that not only performs the three functions of money, but also that can be used easily, conveniently, and virtually anywhere.”
The Digital Assets and Registered Exchanges Act provides for regulation of the issuance and sale of digital tokens, and those issuing these digital tokens and providing associated services. The DARE Act does not empower the Securities Commission to develop a digital asset, only to provide the enabling environment for digital asset providers to create and exchange digital tokens.
Mr Adderley also spoke about “stable coins”, where he said: “Stable coins, as their name implies, are specifically designed to overcome the inherent volatility in digital assets by maintaining a stable value. Usually, by tying the digital currency to an asset, or a basket of assets, the coin can then be used to conduct transactions with minimal loss of purchasing power.”