Caribbean Export OUTLOOK 3rd Edition

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Clearing The Hurdles

like FinTech businesses, continue to hamper regional development and stifle innovation in this industry. One globally tested solution available to governments in the Caribbean is to create a Regulatory Sandbox scheme where, regulators can provide the conditions in which financial institutions and innovators can deploy and test FinTech in real world scenarios with customer safeguards in place. Currently, no jurisdiction in Latin America or the Caribbean offers a Regulatory Sandbox environment for local or global Blockchain innovators who may desire to develop and test their technology in the region. This scenario creates a first mover opportunity for forward-thinking and progressive financial authorities and governments in the region. Countries currently offering Regulatory Sandboxes include Australia, Hong Kong, Indonesia, Malaysia, Singapore, Thailand, Mauritius, and the United Kingdom. Governments choosing to deploy a regulatory sandbox minimize the regulatory risk of infractions as well as consumer harm while tapping into a new wave of transformation within the financial industry with FinTech investments increasing from US$1.8 B to US$19 B in the last five years. The adoption of a similar approach in the region would bring much needed foreign direct investment into regional economies as well as provide opportunities for its human capital. Bermuda has made significant strides towards establishing ICO legislation with the passage of the Virtual Currency Business Act as well as the recent signing of an MOU with Binance Group, the operator of the world's largest cryptocurrency exchange. Bermuda is spending up to $10 million in university training for Blockchain Technology development and compliance. The MOU also states that Binance Labs will invest up to $5 million in new Bermuda-based blockchain companies. US giant Overstock.com has make staggered investments into Bitt, recognized as the region’s leading Blockchain Technology company, to the sum of US$16 million. Leveraging this investment, Bitt has developed and in 2017 made publicly available what is arguably the world’s first blockchain based mobile money platform “mMoney” in Barbados. Comprising of a mobile wallet app and merchant payments solution, this platform offers consumers and merchants alike low cost digital payment and aims to foster increased financial inclusion among the island’s unbanked and under banked citizens. With a mission to ‘empower people’, Bitt’s product suite also includes a Digital Asset Exchange and a Cryptocurrency Mobile Wallet as well as other software products based on Blockchain Technology that support the digitization of the entire money ecosystem. To quote Stephen Phillips, Vice President, Special Projects at Bitt: “ Supporting innovation is an essential part of fueling development in the Caribbean and financial regulators need to accelerate efforts towards providing suitable environments for testing and introducing new products to the market.” Besides Bermuda, another country in the

Caribbean which seems poised and ready to do just that is Jamaica, where a progressive government and facilitating regulators appear to be rising to the challenge of keeping pace with new technologies for growth and competitive advantage. With the help of an approved US$68 million loan from the Inter-American Development Bank (IDB), the Jamaican government announced plans for the creation of a digital society capable of driving growth, creating opportunities for businesses, promoting innovation and creating jobs. In summary, Blockchain adoption will enable more intelligence and security in business and governmental processes because of its innate distributed trust and transparency. However, there are challenges that need to be addressed before Blockchain can proliferate. First, there is a need to overcome the embedded paralysis and calcified thinking dominant in the majority of governments and regulators in the Caribbean region. Antiquated laws and regulation which fail to address Blockchain and other new technologies also pose a challenge where the industry must agree on standards for technology and contract structures across international borders and jurisdictions. Though formidable tasks, they are by no means insurmountable. Change is inevitable and major shifts are already taking place in the consumer world. The Caribbean needs to adopt change at a faster pace, mainstreaming Blockchain technologies as an underlying platform for business and social interaction.