FinTech

FINTECH Circle and The Coin

What makes a US crypto technology firm want to come to an Island in the middle of the Atlantic?

Well, according to Circle, which is headquartered in Boston, with offices in London and China and which has raised $246M in funding from Goldman Sachs, Bitmain, IDG Capital, Breyer Capital and General Catalyst, it is simple: Bermuda is a leader in the important field of regulation.

“We’ve seen firsthand how many governments have not been able to keep pace with the regulatory requirements driven by rapid innovation in the digital asset business and crypto,” says a spokesperson for Circle.

“Bermuda, however, has leapt forward with an exceptionally well-designed and comprehensive regulatory framework (the Digital Asset Business Act of 2018, also known as the DABA).

“The DABA provides a comprehensive framework for the regulation and oversight of crypto financial services, including digital asset issuance, sale and redemption, exchange operations, and custodial services,” the spokesperson continues, adding, “Bermuda’s pioneering approach is the kind of regulatory framework we’ve long advocated to unleash growth in the crypto industry.

“We’ve also witnessed firsthand that the Bermuda government is prepared to iterate and evolve new regulatory rules alongside the pace of technical innovation in the crypto and blockchain field.

“Additionally, we’ve had the pleasure of working with Premier David Burt, along with a number of officials in the government and the Bermuda Monetary Authority who have made this transition to working Bermuda seamless.

“Premier Burt has boldly championed the innovation that allows us to contribute to making the global financial system more trustworthy, inclusive, and empowering for billions of people.”

Bermuda, under Premier Burt, is seeking to be a world leader in the financial technology – FinTech – space.

Fintech is used to describe the application of technology to finance and is an umbrella term that stretches from more traditional technologies like online banking and ATMs to cuttingedge technologies such as blockchain, cryptocurrencies, the Internet of Things, artificial intelligence, and big data.

And, given finance’s role in powering industry, the term “FinTech” can be considered to encompass a broad range of industries that leverage technology to help manage the flow of capital.

According to the Premier, “the continued digitisation of finance will unlock vast new opportunities for efficiency in trade and investment. It will make it possible to trade in assets that

The increasing potential of FinTech for Bermuda

How the Island is bidding to become a market-leading centre

On the surface, FinTech seems a natural fit – financial services driven by disruptive technology domiciled in Bermuda and managed within a flexible yet sophisticated regulatory framework that provides leadership to a new global industry.

Bermuda has certainly paved the way for global innovation, and many of the elements that FinTech requires to succeed exist in abundance on our shores.

So is it a home run waiting to happen? The answer is about as elusive as the new industry itself; that Bermuda is actively seeking a spot at the front of the queue should surprise noone. And, whilst the government appears to be charging full steam ahead, it is also applying some of the very same safety mechanisms that underpin Bermuda’s reputation as a financial service centre.

As Premier David Burt explained “Given that Bermuda has a reputation to protect, our rules will be incredibly stringent. If there are companies that cannot abide by those rules, they will not be welcomed on our shores.”

Those who are welcomed to Bermuda can lead the way for the very same reason Bermuda always leads the way, i.e., a nimble regulatory system in which the government collaborates easily and effectively with the private sector, whether they be players already on the Island or interested newcomers.

In fact, these forces are already at work, with Bermuda recently

previously were too expensive or difficult to be able to before.”

“It will expand accessibility to new and broader sources of capital and provide banking and investment options for a much wider range of people. It will also unlock new means of managing and personalising data to provide better insights, guidance, and feedback, enabling us to live better lives,” says the Premier.

Circle, launched in 2013 by Jeremy Allaire and Sean Neville, was founded on the belief that open crypto technologies would replace the world’s closed proprietary financial systems, allowing everyone, everywhere, to participate in an economy that’s more fair, inclusive, and accessible.

Today, the company’s products – Poloniex, SeedInvest, USD Coin, Circle Trade, and more – drive a new kind of global financial services.

Furthermore, earlier this year, Circle acquired SeedInvest, the largest equity crowdfunding platform in the United States.

According to the spokesperson, through this partnership, Circle and SeedInvest aim to democratize the private capital markets by further streamlining the way companies raise capital online, opening up startup investing to millions of investors around the world and launching the first truly liquid secondary market for private company shares.

“In the short term, we’re giving nonUS customers the ability to use Poloniex through our new Circle International Bermuda entity,” adds the firm’s spokesperson.

“We hope this opens the door for non-US customers to access the entirely new capabilities we plan to release in the coming months, including new crypto asset listings, advanced trading products, and more while also staying true to our commitment to compliant, well-supervised operations and customer protections.”

Asked if Bermuda will be attractive to other firms in the FinTech space, the Circle spokesperson had no doubt that it would.

“As I have noted, Bermuda is leading the way on policy innovation for digital assets. While many governments around the world have not kept pace with the regulatory requirements driven by rapid innovation in digital asset businesses and crypto, Bermuda has leapt forward with an exceptionally well designed and comprehensive regulatory framework: the DABA.

“The DABA provides a comprehensive framework for the regulation and oversight of crypto financial services, including digital asset issuance, sale and redemption, exchange operations, and custodial services. That policy innovation is something that many companies will find attractive.”

enacting three laws: the ICO (Initial Coin Offering) Act; the Digital Asset Business Act; and the Restricted Banking Act. These laws are amongst the first in the world. Furthermore, the Bermuda Monetary Authority (BMA) released a digital asset business code of practice and information bulletin outlining what documentation is required when applying for a digital asset business license. The BMA has also hired a senior advisor in the field.

It is the speed of these developments that puts Bermuda at the front foot globally. As described at CoinDesk’s Consensus: “The peer-to-peer nature of this technology presents real challenges for legislators and governments, as they seek to carefully balance protection of markets and national security with nurturing of this unique technology.”

This translates to big governments moving slowly because the risks are monumental. Bermuda, however, is frequently described as the “risk capital of the world.”