SEEK­ING A CRYPTO CON­SEN­SUS IN THE CARIBBEAN

How do Caribbean na­tions treat cryp­tos? And how should they?

The Star (St. Lucia) - Business Week - - NEWS - BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

Across the Caribbean the fi­nan­cial sec­tor plays a piv­otal role in day-to-day business for many na­tions. Just as the in­dus­try is ex­pe­ri­enc­ing rapid change, thanks to the ‘push and pull’ fac­tors of digi­ti­sa­tion and glob­al­i­sa­tion in our na­tional economies, so too is it for­ever fac­ing the chal­lenge of emerg­ing tech.

Few new forms of tech have the po­ten­tial to trans­form our world like cryp­tocur­rency. Yet while those ad­vo­cates for this form of dig­i­tal fi­nan­cial pay­ment cite its po­ten­tial to be rev­o­lu­tion­ary, it also un­ques­tion­ably comes with some new risks. That’s why strik­ing the right bal­ance be­tween en­cour­ag­ing in­no­va­tion and proper reg­u­la­tion is crit­i­cal, but also very dif­fi­cult, es­pe­cially given that the bor­der­less po­ten­tial of cryp­tocur­rency means pol­icy part­ner­ship be­tween na­tions can be cru­cial.

So, what are the is­sues that con­front re­gional cryp­tocur­rency reg­u­la­tion? And what are the prospects for a crypto con­sen­sus emerg­ing in the Caribbean? Let’s look in-depth now.

HOW TO REG­U­LATE AND IN­COR­PO­RATE

Crypto reg­u­la­tion is a dif­fi­cult is­sue for so many na­tions. It not only touches on de­cid­ing how to de­fine some­thing of value—whether cryp­tos should be clas­si­fied as a cur­rency, a piece of prop­erty, or some­thing else—but also how to treat the broader re­la­tion­ships it has to other ar­eas of business and life.

While each na­tion is dif­fer­ent, cer­tain ques­tions com­monly arise. How do you reg­u­late its use as a fi­nan­cial in­stru­ment where it’s used as some­thing of value for consideration and the form­ing of a con­tract be­tween two par­ties? How do you de­fine its value from one day to the next when it’s a 24/7 mar­ket with a po­ten­tial for in­cred­i­bly volatile moves that de­liver huge highs and low lows?

Fur­ther­more, how do you deal with se­cu­rity mat­ters sur­round­ing the ver­i­fi­ca­tion of some­one’s iden­tity and the preven­tion of raids on ex­changes lo­cated in a na­tion, thereby pro­tect­ing its cit­i­zens who use the ex­change? Even if the gov­ern­ment can’t or won’t guar­an­tee that an in­vest­ment is a wise one, it can rea­son­ably look to guar­an­tee that the plat­forms on which an in­vest­ment is traded are se­cure, and not prone to theft or breach.

LOOK­ING FOR RE­GIONAL LEAD­ER­SHIP

While there are gov­ern­ments that have pi­o­neered cryp­tocur­rency, this is, with­out doubt, a field where business must play a lead­er­ship role. Within the cap­i­tal cities of the re­gion there are ad­vo­cates and crit­ics alike of cryp­tocur­rency. On an even-handed do­mes­tic is­sue, this may not frus­trate progress but, as cryp­tocur­rency is a global phe­nom­e­non, the fall­out of a lead­er­ship vac­uum can be im­mense and se­vere.

Local busi­nesses like Bitt and fi­nan­cial houses like the East­ern Caribbean Cen­tral Bank have fea­tured promi­nently in this space. Both have served as vivid ex­am­ples of the con­tem­po­rary and prac­ti­cal op­por­tu­ni­ties forg­ing greater ties be­tween emerg­ing tech and ex­ist­ing busi­nesses in the re­gion.

Yet it’s also true that the cryp­tocur­rency sec­tor seeks to de­velop in our re­gion dur­ing a time when great ten­sions ex­ist in the local fi­nan­cial sec­tor sur­round­ing the on­go­ing con­tro­ver­sies eb­bing from the Panama and Par­adise Pa­per leaks.

The re­la­tion­ship be­tween emerg­ing fi­nan­cial houses and the ‘tra­di­tional’ fi­nance in­dus­try is not al­ways clear-cut, nor re­flec­tive of any one trend over the in­dus­try as a whole. Yet un­doubt­edly the blur­ring of the tra­di­tional and emerg­ing fi­nan­cial in­dus­try could rep­re­sent ‘the worst of both worlds’, as many crit­ics hold that the ex­ist­ing in­dus­try by it­self lacks suf­fi­cient reg­u­la­tion around the re­gion. This is why business could play such a vi­tal role in pro­gress­ing this de­bate and pol­icy de­vel­op­ment.

For bet­ter or worse, gov­ern­ments are of­ten too slow to re­act to pub­lic dis­cord, or too fast, via a knee jerk re­ac­tion. In this en­vi­ron­ment, the strong and proac­tive role of busi­nesses in launch­ing and main­tain­ing

crypto ven­tures not only serves as proof pos­i­tive of crypto’s vi­a­bil­ity and po­ten­tial, but also en­sures strong voices are on hand to en­gage with gov­ern­ment.

THE CRYPTO CON­SEN­SUS

Across the Caribbean there is the recognition that achiev­ing a re­gional con­sen­sus is wholly un­likely, and likely un­nec­es­sary. Each na­tion can pur­sue its own fi­nan­cial af­fairs, and do so with the knowl­edge that ro­bust se­cu­rity in its fi­nan­cial sec­tor do­mes­ti­cally can serve not only as a foun­da­tion that ben­e­fits the peo­ple within its bor­ders, but also the re­gion as a whole.

Nonethe­less, as we have de­tailed in re­cent weeks, even if re­gional con­sen­sus isn’t achieved, re­gional dis­cord can be es­pe­cially dan­ger­ous.

The grow­ing ten­sion be­tween the Euro­pean na­tion of Malta as an as­pir­ing crypto cap­i­tal that has lib­er­ally is­sued Cit­i­zen­ship by In­vest­ment Pro­gramme (CIP) pass­ports, and the Euro­pean Union gov­ern­ment in Brus­sels, shows the risks here.

As with CIPs, even if all other Caribbean na­tions adopted very strong cryp­tocur­rency reg­u­la­tion, just one na­tion taking a lack­adaisi­cal ap­proach to good reg­u­la­tion could be a se­cu­rity threat to the re­gion.

This de­bate will con­tinue to de­velop and progress into the fu­ture. Any fair consideration, there­fore, of to­day’s land­scape and its short­com­ings must con­sider that the fu­ture may yet yield stronger shared reg­u­la­tion in this space, if not at a re­gional level, then po­ten­tially a bi­lat­eral one, as na­tions with close ties seek to adopt shared crypto pol­icy, to make trade and business eas­ier.

COIN­ING A NEW POL­ICY

Ul­ti­mately, even the biggest crit­ics would be wary of sug­gest­ing that the con­cepts of cryp­tos are to­tally an im­mi­nent bust and could never again be­come use­ful. What­ever the fu­ture holds in the long term, even in the short term there are blockchain ap­pli­ca­tions be­ing im­ple­mented lo­cally and glob­ally.

The shared space of cryp­tos and blockchain means the on­go­ing use of one would al­ways keep the other in play, even if right now there are hur­dles to clear be­fore cryp­tocur­rency stands on an equal foot­ing with a fiat cur­rency, if in­deed it ever does, or instead drives for­ward a new fi­nan­cial for­mat that sees cryp­tos ul­ti­mately co-ex­ist peace­fully.

What­ever the case, the de­bate around the right reg­u­la­tion for cryp­tos in our re­gion, and be­yond, will en­dure.

While there are gov­ern­ments that have pi­o­neered cryp­tocur­rency, this is, with­out doubt, a field where business must play a lead­er­ship role. Within the cap­i­tal cities of the re­gion there are ad­vo­cates and crit­ics alike of cryp­tocur­rency

While Puerto Rico is lead­ing the cryp­tocur­rency charge, it is not alone. There are eight other Caribbean Is­land economies which make up the East­ern Caribbean Cen­tral Bank (ECCB) who are ex­plor­ing dig­i­tal cur­rency op­por­tu­ni­ties. They have con­sid­ered is­su­ing their own cryp­tocur­rency called the Dig­i­tal East­ern Caribbean dol­lar (DXCD)

RegTech is the use of new tech­nol­ogy to fa­cil­i­tate the de­liv­ery of reg­u­la­tory re­quire­ments

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