The man who cofounded Crowdfunder in the US is one of the entrepreneurs behind a proposed digital asset-friendly bank looking to incorporate in Bermuda.
Known as Jewel, it aims to be a limited bank that will provide traditional banking services to digital-asset companies in Bermuda. In addition, it seeks to build payment and settlement tools that will provide a gateway between the traditional banking system and crypto assets.
American Chance Barnett is cofounder of Jewel. He has been involved in building technology companies for almost 30 years, and helped set up Crowdfunder in the US — a high-level equity crowdfunding site allowing accredited investors to support entrepreneurs and start-ups.
Last month, he staged the invite-only B3 Future Banking Summit in Bermuda. The event focused on banking, blockchain and Bermuda, and featured speakers from the likes of IBM, and former executives of World Savings Bank and the London Stock Exchange.
Curtis Dickinson, the finance minister, and Sir John Swan, the former premier, also attended the summit in Hamilton.
Mr Barnett said the goal was to bring together stakeholders who were focused on bringing the usage and the impact of blockchain and digital currencies to the world.
“One of the big bottlenecks to that is just allowing people to take the business that is building part of that impact or usage, to utilise the existing banking and payment systems to be able to function as a real business,” he said.
“Just that piece of the infrastructure does not exist in many parts of the world.”
The summit brought together legislators, policymakers, entrepreneurs and investors to discuss what is working, what is not, and look at the risks and opportunities.
Mr Barnett said participants had valued the experience, the opportunity to network and the feedback from Bermuda representatives and the Bermuda Business Development Agency.
The problem of securing banking services for fintech companies has stymied growth in the sector around the world, and been lamented by David Burt in the past.
However, in March, the Premier announced that New York-based Signature Bank, a full-service bank, was willing to consider Bermuda-licensed businesses for banking services. The bank was also the first to launch a New York regulator-approved, blockchain-based platform for managing money transfers between clients.
Brian Sewell, founder of Rockwell Trades, and a speaker at the B3 summit, explained why traditional banks have shied away from providing services to crypto companies and many fintech enterprises. He said: “It has been difficult for banks to move into this space as there has not been clear regulation for them to act in, so the risk becomes very high for banks.
“Bermuda has acted quickly and provided some decent regulation, but the banks here in Bermuda have corresponding relationships with banks outside Bermuda, in other jurisdictions that have not opened themselves up to supporting crypto-related companies.”
He said it was the fear that they would damage their relationship with their overseas corresponding banks that has stopped banks in Bermuda from providing services to crypto and fintech business.
Mr Sewell has a financial and banking background. He was an executive at World Savings Bank for eight years, shortly before it was acquired by Wells Fargo. Along with Mr Barnett, he is a cofounder of Jewel.
He added: “The banking is an obstacle that is getting resolved, and the Bermuda Monetary Authority is doing a great job in ensuring that Bermuda does it the right way.
“Bermuda is seeking to maintain a relationship of trust with all other nations, so they can’t be reckless in their decisions, so there is a balance between speed and being conservative.”
Explaining the vision for Jewel, Mr Barnett said it would be a digital-asset-friendly bank to provide traditional banking services to digital-asset companies in Bermuda.
He said: “Alongside that, we are going to be building a specific set of payments and settlements tools focused on that by the usage of digital-asset companies.”
He gave an example of an exchange where customers trade cryptocurrencies, such as bitcoin, and then want to move their money back in to the traditional fiat banking systems, to convert crypto into dollars or another currency that can be used for services such as payroll.
“That link largely does not exist from a technical and regulatory perspective, and so Jewel’s other role is to provide that bridge or gateway between the traditional banking system for dollars and crypto assets.” He said it is a challenge not only for Bermudian companies and crypto exchanges, but also for others around the world.
The aim is for Jewel to incorporate in Bermuda as a limited bank then operate the planned payment and settlements structure for Bermudian companies and others that will use it more globally in their payments.
When asked how soon that might happen, Mr Sewell said there is a balance to be struck and “the Bermuda Monetary Authority needs to move at a pace at which they are comfortable with”.
He added: “We anticipate that it will happen within the next eight months.”
As for the B3 Summit in Bermuda, Mr Barnett said it had been a success.
He said: “They [attendees] say they got a lot of value and met people they did not know before. We feel it was a success from the feedback we got from Bermudians, some of the legislators here, and the Bermuda Business Development Agency that was our partner. It brought people here and helped them understand why this is a good jurisdiction.”
He added: “What attracts me to Bermuda is the legal clarity with Daba [Digital Asset Business Act] regulations, and the new banking regulations. It’s the right climate and the right support from the current administration, and other parties here, to develop businesses in a thoughtful and safe way.
“I like Bermuda’s approach to maintaining a pristine reputation, but be a part of driving this innovation in digital-assets.”
The summit was held in partnership with Jewel, Rockwell Capital, BDA and Fintech Bermuda.
Andy Burrows, chief executive officer of the BDA, said: “This type of highly targeted event aligns with our agency’s mission to promote inward investment that contributes to Bermuda’s economy and social development, and strengthens Bermuda’s image as a global strategic business partner.
“It also bolsters Bermuda’s hospitality sector by attracting executive-level business visitors. We were proud to promote an opportunity for wide-ranging thought leadership that will advance Bermuda’s ambitions in the fintech arena.”