A leading American securities official says her country can learn from the approaches taken in Bermuda and other jurisdictions concerning the regulation of cryptocurrencies.
Speaking at a convergence forum hosted by the Singapore University of Social Sciences, US Securities & Exchange commissioner Hester Peirce said “crypto regulation affords international regulators the opportunity to learn from one another”.
She added: “I often have expressed my concern that the US will fall behind other countries in attracting crypto-related businesses unless we are more forward-leaning in establishing a regulatory regime with discernible parameters. The US SEC can look to our counterparts overseas for ideas in untangling some of our most difficult legal and policy questions in this area.”
Stressing that the views expressed were her own, and not necessarily those of the SEC or her fellow commissioners, Ms Peirce said regulators in jurisdictions including Singapore, Thailand, Japan, Hong Kong, Malta, Switzerland, France and Bermuda were addressing difficult questions concerning cryptocurrency regulation.
She said: “Bermuda is one of the only jurisdictions to address the custody question in detail. In conjunction with a regulatory regime for digital asset businesses, the island also released draft guidance for crypto custodial services, which addresses such difficulties as how to store private keys for hot and cold storage while preserving necessary liquidity, what safeguards should be in place to prevent unauthorised access, and how to frame internal audit of transactions to ensure their integrity.”
Referring to the efforts of Bermuda and other countries to innovate, she said: “These ‘laboratories of regulation’ operated by our international counterparts have me thinking about possible paths for the US to become more welcoming of crypto innovation.”
She added: “I look forward, for example, to learning more about Bermuda’s custody framework to see if we can draw from it as we think about how our custody rules apply in the crypto context.”
Ms Peirce concluded: “Whatever direction we go in the United States, continued communication among the world’s financial regulators will be important. While I believe a single global regulatory framework would be unwise, regulators can create a healthy environment for this new market to grow by sharing information that will smooth cross-border transactions while stamping out fraud and other harmful activity.
“We also can continue to learn from one another to fill the gaps in our own regulation and borrow, when appropriate, from frameworks developed and tested in other places.”
Ms Peirce’s comments were made on the same day that the founder and chief executive officer of a fintech firm that is to set up on the island told a US Senate Banking Committee that the regulatory approach taken by the Bermuda Government “can and should be emulated by other countries”.
Jeremy Allaire’s fintech company, Circle, will create more than 30 new jobs in Bermuda over the next two years, he said recently.
Mr Allaire said an uncertain and restrictive regulatory environment has led many digital asset projects and companies to domicile outside of the US and to block US persons and businesses from accessing products and technologies.
In Circle’s case, he told the Senate committee, the firm has begun the process of moving its international-facing products and services into a licensed Bermuda entity.
“Bermuda’s forward-looking Digital Asset Business Act provides a comprehensive regulatory framework for companies offering this new type of financial service,” he testified.
“We believe that the approach the Bermuda Government has taken can and should be emulated by other countries.”
Mr Allaire’s crypto-finance firm was the first to get a full licence under DABA, which came into force last September.