In a consultation paper released last week, the Bermuda Monetary Authority (BMA) proposed a framework for developing responsive regulation for the country’s expanding FinTech and cryptocurrency industry.  The paper introduces draft legislation that will apply to businesses providing services within the domestic virtual currency industry, including virtual currency exchanges and wallet providers.

Worldwide, financial regulators have encountered difficulty extending existing securities and financial legislation to virtual currency and related projects.   Attempts to regulate in this area are often motivated by a desire to protect investors or to prevent illicit activities like money laundering.  However, many jurisdictions are also attempting to design regulations that also foster innovation and economic growth. 

In an information session hosted by Wayne Caines, the Bermudan Minister of National Security, and covered by the Royal Gazette, government officials cited an increasing demand for regulatory certainty around cryptocurrency businesses.   While some cryptocurrency businesses and projects focus on decentralization and self-regulatory solutions, other businesses increasingly seek to operate and grow within regulatory environments where their employees, contributors, and clients aren’t exposed to uncertain legal and financial risk.

The Regulatory Sandbox

Notably, Bermuda’s consultation paper proposes allowing innovative businesses in this sector to participate in a “regulatory sandbox” as part of their licensing system.  Regulatory sandboxes allow businesses to consult with regulators while developing innovative products, services, and business models.  The sandbox model also limits exposure to regulatory consequences while a business refines their offerings.  Participation also provides regulators with essential information and feedback for designing effective, responsive and appropriate regulation.   

If the proposals are implemented, Bermuda will join countries like Canada and the United Kingdom in adopting the regulatory sandbox approach to cryptocurrency business.  The 150-page consultation paper and related proposed legislation can be accessed via the BMA’s Notices page.   The paper and its proposals are open for comment from the industry and the public until May 2, 2018.

blockchain strategy

The Prime Minister of the United Arab Emirate (UAE), and also the Ruler of Dubai, Sheikh Mohammed bin Rashid has revealed the UAE Blockchain Strategy 2021 which lays out a plan for the UAE to become a world leader in adopting blockchain technology by the year 2021. Specifically, the country aims to make it so that “50% of government transactions on the federal level will be conducted using blockchain technology by 2021.”

Using blockchain technology allows governments to become more transparent. The tamperproof properties of blockchains versus databases are especially ideal for this use case.

How does using blockchain strategy and technology save money?

Mohammed bin Rashid plans to specifically target the AED11 billion (roughly 3 billion USD) that is spent every year on documenting transactions and related documents. All in all, UAE estimates that it will save 77 million hours of work, reduce 389 million documents, and save 1.6 billion kilometers driven.

The blockchain strategy will be rolled out with focus on four areas as identified by the government:

  1. citizen and resident happiness
  2. government efficiency
  3. advanced legislation
  4. global entrepreneurship.

Since this report was released by the Dubai Media Office earlier this week, cryptocurrency prices across the board have risen some. The UAE has long expressed interest in using blockchain technology. There have been projects experimenting with land deed registration, removing paperwork, and more. His Highness Sheikh Mohammed bin Rashid told his people:

“This technology will save time, effort and resources and enable individuals to conduct most of their transactions in a timely manner that suits their lifestyle and work.”

What do you think about Dubai’s Blockchain Strategy? Let us know in the comments below.