Island gears up for blockchain opportunities

Moving forward: John Narraway, left, and Wayne Caines, Minister of National Security, have spoken of Bermudas potential in the world of crypto and blockchain technologies (Photograph supplied)



Utility tokens is set to be a buzzphrase in Bermuda in 2018 as the island increases its presence in the world of digital assets and blockchain technology.

With the Bermuda Government stating its intention to embrace new technologies and opportunities centred on digital ledger technology, commonly known as blockchain, the world of utility tokens is in its sights.

But thats not all, there are also moves to bring the best minds in the world of fintech and insurtech to the island to interact with Bermudas insurance and reinsurance industry and international business.

And a key ambition of the drive into the new technologies is to create job and education opportunities for Bermudians.

The Governments cryptocurrency initiative is under the direction of Wayne Caines, Minister of National Security. A two-pronged task force was announced in November, with one team exploring business development opportunities, and the other dealing with legal and regulatory matters.

An initial focus is to consider a regulatory framework covering the promotion and sale of utility tokens that are aligned to blockchain networks.

John Narraway, who is part of the business development team, said there is an interest in the crowdfunding side of utility tokens.

Were not looking at bitcoins or changing currencies. We are looking at a different way of doing fundraising, he said.

The sale of utility tokens, through a process called initial coin offerings, globally raised a combined $3.25 billion in 2017.

Utility tokens are generally digital coupons on a blockchain distribution network that are sold to buyers. Tokens can be transferred on the network and traded on cryptocurrency exchanges. They serve different functions, such as granting future access to a companys services or products. A defining characteristic of utility tokens is that they are not designed as investments.

Bermuda is no stranger to digital currency and tokens. In November, e-sports company Unikrn Bermuda Ltd launched its sports betting token Unikoin. And in 2007, Bermudian-headquartered Hub Culture launched Ven, the worlds first digital currency.

Mr Narraway, a consultant with the Bermuda Business Development Agency, said: Bermuda is a very strong capital market globally. We are seeing companies using these token launches to raise capital as opposed to going to traditional venture capital. We see that as an opportunity. If they are raising money that way we want their business in Bermuda, and we need to be adapting that type of philosophy at the same time.

Whether it is a prudent way to raise money or not depends on what type of industry you are in.

While Mr Caines said Bermuda must ensure the appropriate legal and regulatory framework is in place.

Everything we are going to do will be at rapid speed, but we are going to leave no stone unturned as it relates to legal and regulatory elements of the project, he said.

We want to make sure that we remain a blue-chip jurisdiction. We have worked hard to keep our reputation stellar.

This Government will do nothing to jeopardise Bermudas international business reputation.

He said there needs to be a legal framework that is robust but also light-touch and allows us to grow in this space.

And he highlighted the islands decades-old reinsurance industry as an example of the way ahead.

He said the reinsurance market has been one of the bedrocks of the islands international business, adding: International finance has become something we are known for all around the world. We believe that right now there is a good opportunity for a step change, to bring inward investment into Bermuda, to bring people that are technology savvy to Bermuda.

We can take the best practice from the insurance and reinsurance market; we have a formula that works. Lets morph this into this new phase. We have the brains, the history, pedigree, the infrastructure. We tweak those, find the people from around the world that are in this sphere, and marry the opportunity with our environment.

We have some of the best people in Bermuda on our teams, and I believe we should see some green shoots soon.

Mr Caines said people realise the new technology is an opportunity stretching beyond utility tokens into fintech [financial technology], insurtech, medtech and edutech.

Lets look at creating infrastructure where start-ups see that Bermuda is getting it right, in a phased and stepped approach.

We want to let the world know that Bermuda is open for business in this space and using these sorts of technology.

Another key aspect is the benefits Bermudians might reap from the initiatives.

Mr Caines said: The opportunities will filter directly through our country. And for any project we do there has to be an education component. It has to have the ability to give the people of our country opportunities.

We are going to train our young people to code as well. We want a project that is symbiotic  that all our country can benefit from.

This would involve companies investing in our school students, developing the appetite, setting the stage, getting their minds ready for being a part of this technology.

Meanwhile, Mr Narraway said Bermuda is now interacting with some of the worlds leading people in the new technologies. He mentioned the success of the Hub Culture innovation campus at Ariel Sands during the summer, and said: Since then, we have three projects in train that are around bringing the best minds in industries to come down. One is a two-week think tank that will interact with the insurance industry here for insurtech.