The government of Bermuda is creating a new class of bank to offer banking services for fintech companies in Bermuda.
The proposed legislation, which will create a new restricted banking licence and outline what kind of services these new banks can offer, comes as fintech companies have met with much resistance when trying to work with the more traditional and risk averse banks.
Seeing a need for flexibility in the rapidly changing financial services sector, the government consulted with Bermuda’s banks, stressing that they won’t lose business because the existing banks aren’t even providing these services.
“Bermudians need options in banking; the FinTech industry needs an innovative, robust banking solution,” said Bermuda’s premier and minister of Finance David Burt. “Those needs are not mutually exclusive and this Government is prepared to take the steps necessary to achieve both goals.”
The move follows the ICO Bill and the Digital Asset Business Act, two previous pieces of legislation the government of Bermuda introduced that are designed to create a regulatory framework for fintech companies wanting to offer ICOs and do business in Bermuda.
Bermuda, a British overseas territory in the North Atlantic, has a small population but a high GDP per capita (the UN places them fourth in the world with a GDP per capita of $99,363) powered by a strong insurance and financial services industry.
It is that financial services industry that Bermuda is strategically looking to bolster after their economy faltered post-global financial crisis. They see fintech as a strong source of growth and one that’s a natural fit for them given their advanced economy and financial infrastructure, which is quite unlike most of the countries that are providing a positive regulatory environment for anything cryptocurrency related.
Crypto companies are quickly starting to see the benefit of working in Bermuda.
In April, the government signed a memorandum of understanding (MOU) with the cryptocurrency exchange company Binance Group in which the company is expected to invest $15 million in the local economy to create jobs for its new global compliance base, sponsor university-level training in blockchain technology development, and provide other investments.
Following that in May was an MOU with blockchain company Shyft, which will see the company investing $10 million in the local economy to create new jobs, infrastructure, and education.
Bermuda clearly sees the future of fintech and the importance of innovation. “Legacy industries the world over have lost that ability [to evolve and innovate] and the future belongs to those who can quickly lay a foundation for growth, respond to emerging trends and preserve a reputation for sound management in the process,” Premier Burt said. “For countries it is no different, Bermuda must be nimble or we will be left behind.”