The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian attorney yesterday hit back against assertions that the country’s financial services sector is poorly regulated following FTX’s implosion, arguing: “Nothing could be further from the truth.”

Christel Sands-Feaste, the Higgs & Johnson partner, told the Bahamas Business Outlook conference this nation should “be proud” that it was among the first to establish a regulatory regime specifically focused on the digital assets sector despite the crypto currency exchange’s highly-publicised collapse.

She added that The Bahamas “cannot allow a single event” to distract it from seeking out new industries and economic growth opportunities despite the negative international headlines generated by the FTX saga, which many believe has damaged the country’s reputation and harmed its ambitions - at least in the short-term - to become a “hub” for the digital assets sector

Mrs Sands-Feaste did not once identify FTX by name, but there was little doubt what she was referring to. Speaking to this nation’s progress as it gears up for the 50th independence anniversary celebrations, she said: “We can be proud of The Bahamas’ reputation as a well-regulated financial services jurisdiction that is compliant with international best practices.

“We’ve seen and read in the newspapers that The Bahamas is not well regulated. Nothing could be further from the truth.” Pointing out that the banking and financial services regulatory regime has undergone at least five major revisions since 1973, she added that this nation has possessed “cutting edge” legislation ever since the 2000 reform package was enacted to escape the then-blacklisting.

“We are well regulated. We are compliant, and have been for a very long time,” Mrs Sands-Feaste continued. “We have a long and rich history as being a jurisdiction of choice for financial services.... The Bahamas continues to evolve is regulatory framework. We’ve been updating, we’ve been modernising. We’ve not stood still. That spirit of innovation is something to be proud of.”

Pointing to the creation of new financial services products, such as the SMART Fund in 2003 and the ICON (Investment Condominium) in 2014, the Higgs & Johnson partner asserted that The Bahamas was also due plaudits for its 2020 decision to create a specific regulatory regime for the fast-evolving digital assets sector.

“More recently, we regulated the digital assets space with the DARE (Digital Assets and Registered Exchanges) Act in 2020,” she added. “The Bahamas is one of the few jurisdictions in the world which regulates that sector.” Mrs Sands-Feaste said the oversight provided by DARE extends beyond crypto currencies to other digital assets, including tokens. “It is forward thinking and we should be proud of that,” she continued.

Others may argue that DARE Act, which was due to be upgraded prior to FTX’s failure, did little to prevent the crypto exchange’s failure. However, the Securities Commission has argued that the Act’s existence enabled it to react rapidly to events by applying to the Supreme Court for the joint provisional liquidators’ appointment.

Mrs Sands-Feaste, meanwhile, returned to the FTX theme later in her Outlook presentation by arguing that The Bahamas cannot be derailed from its ambitions by the implosion and subsequent fall-out. “We can’t allow a single event to dampen the spirit of innovation. That is critical to the success of The Bahamas and I encourage us to continue to do it,” she said.

The Higgs & Johnson partner pointed to other Bahamian ‘firsts’, such as the introduction of the Central Bank-backed digital currency, the Sand Dollar, while acknowledging that inflationary pressures over which this country has no control were increasing the cost of doing business for local firms and creating “headwinds” for the local economy.

She added that it was also “becoming increasingly complex to do business” in The Bahamas due to the multiple rules, regulations, permits and taxes that companies and entrepreneurs must grapple with. This, Mrs Sands-Feaste said, costs businesses both time and money, although many struggled to quantify the precise impact.

She identified access to banking and financial services as a further challenge, adding that while The Bahamas has “embraced” digital transactions this remains “a journey” where those who lack computer access are disadvantaged and have to stand in branch queues. Another aspect of inequality exists on the Family Islands, where persons sometimes have to travel 40-50 miles to reach a physical branch location.

Mrs Sands-Feaste also pointed to concerns surrounding Nassau’s efforts to impose its development vision on Family Island communities. While the Government’s priorities were to ensure investment happened, local communities were likely focused more on how they will benefit and permanent jobs created beyond the construction phase. And, given The Bahamas’ archipelagic nature, different islands have different challenges.

To counter this, she said: “We have to start with ourselves. We have to increase our focus on productivity and the service delivery model. That says the client, the customer is always right. That’s what they talk about in retail. In hospitality, the guest is always right, because one bad experience reflects on all of us, and clients paint The Bahamas with a brush that is all the same.”

The Higgs & Johnson partner said it was “absolutely critical to the future of the country” for The Bahamas to entice its overseas university graduates back home, pointing to a World Bank study that found 61 percent of this group decide to pursue opportunities abroad upon completion of their studies.