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‘Be ready for international attacks over digital role’

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Hubert Edwards

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A financial analyst warns that international “attacks” on the financial services sector should be expected as the country’s involvement in the digital assets and cryptocurrencies business develops.

Hubert Edwards, principal of Next Level Solutions, said in a statement sent to the media: “Many are still uncertain about this new paradigm of digital/virtual assets, non-fungible assets and currencies. Our position at NextLevelSolutions is that while underdeveloped at this stage the use cases of the technology in many instances are encouraging with the ability to successfully create value. The emergence of stablecoins; the disappearance of some levels of regulatory fuzziness; and the roll back from total anonymity, suggest that these very much have the ability to integrate into traditional financial systems and are therefore here to stay. This document provides brief recap and commentary on the white paper, undergirded by contemplations of how do we capitalise on the new evolving technologies and how to strategise for the creation of real national long-term value.

“Next Level Solutions generally supports the propositions in the white paper and the framework. The insights and intentions are clear. The country’s proposed ‘differentiated’ approach, designed to create competitive advantage, especially as it relates to proportionality in regulations, appears sound, responsive and respectful of the developing environment.

“The paper does have a number of broad statements for which general refinements will be required for better communication of national benefit. While the focus is on digital assets this represents, in a significant way, an economic policy position. To underline this, we note from the IMF document cited above ‘The authorities would like to establish The Bahamas as a leader in digital assets and crypto currencies. They are pleased to have put in place a designated legal framework for the digital asset space (the 2020 Bahamas’ Digital Assets and Registered Exchanges Bill, DARE) and are working to facilitate the granting of approvals and licenses in a fair and transparent manner’.”

The statement also said: “The most direct observation is that digital assets and the underlying technologies has the ability to revolutionise payment systems, intermediation and the provision of financial service across the board. Decentralised financing (DeFi) is taking hold in the global space with the use of smart contracts. The FATF’s most recent look at virtual assets and virtual assets service providers (VA/VASP), contemplating the risk to the financial system, gives a clear appreciation of the future value of the technologies. The accepted position is that virtual assets are making major incursions into the traditional system and there are concerns for financial stability.

It added: “We believe that the focus should be on the technology while seeking to benefit from what is currently evolving. The technology in the interim will be disruptive in different ways to financial services and must therefore be carefully managed. The financial values that are being observed today may very well fall away but we must be mindful that it could take a system with it. Regulations, risk management, compliance and strategic thinking become paramount as this evolves.”

It continued: “Following pioneering moves with the DARE (Digital Assets and Registered Exchanges) Act, the current developments hold great significance for the continued vibrancy of the local financial services sector (offshore) with high spillover value and effect for domestic segments of the economy. We consider this a very progressive and useful policy position. The stated intention of The Bahamas becoming a center of excellence in the region and world is, in our opinion, very fascinating and highly strategic. The position is, however, not without important challenges which should not be ignored if the country is to maximise its potential in this arena.

“It should be anticipated, consistent with past attacks on financial services sector, that international efforts to control the crypto space will emerge. It is inevitable, should be anticipated and strategized for. AML/CFT represents the most likely pressure point. It should be accepted that they are coming, especially the EU. Their modus operandi is well known and consistent and they will be looking for cracks to exploit as might be manifested by weak AML regimes, light touch regulatory regimes, lack of enforcement, and of course we anticipate that claims of taxation abuse will feature and these arguments around given on going debates about when taxable events with cryptocurrencies crystalizes and where.”

Comments

tribanon 3 months ago

'K'rypto Bahamas just got poked fun of on CNBC during a live interview with Anthony Scaramuchi. And to think 'K'rypto Davis wanted to make The Bahamas the 'K'rypto capital of the world. A lot of gamblers have recently lost a lot of money in the imploding 'K'rypto markets.

The only other place they could have lost their money faster would have been playing any of the numbers games run by Sebas Bastian's gambling enterprise aka Lucky Charms. LMAO

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