International Business

Burt: Quadriga fiasco would not happen here

  • Fintech focus: David Burt, the Premier

When the chief executive officer of cryptocurrency exchange Quadriga CX died late last year, he left $190 million worth of investors’ assets stranded.

More than three months later, authorities are still trying to recover those cryptocurrency assets and work out why only Gerald Cotten — a 30-year-old who died from complications related to Crohn’s disease on a visit to India — had the password to the key to unlock those assets in an offline “cold wallet”.

David Burt, the Premier, said in an interview with Forbes that this could never have happened if Quadriga had been based in Bermuda.

Speaking to the magazine’s Balancing the Ledger feature, Mr Burt said: “If Quadriga was licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual.”

Mr Burt was referring to the Digital Asset Business Act 2018, the centrepiece of the island’s legislative framework for fintech and cryptocurrency businesses.

“It basically states what you have to do with the master keys, how those things have to be handled, and making sure that they cannot be lost, or if they are lost, there’s a way for that recovery to happen,” Mr Burt said.

The Premier said that 74 fintech companies have incorporated in Bermuda. The fintech companies operating in Bermuda also include a compliance-focused subsidiary of Binance, a Hong Kong-based cryptocurrency exchange.

While the country is seeking to attract more such businesses, companies will have to pass a “very stringent test” in order to prevent disasters like the one at Quadriga, Mr Burt added.

“We recognise that any reputational damage from scams or otherwise can have an impact on our traditional financial services sector,” he said, “and we don’t want that, I would call it, cross-contamination.”

The interview was one of several given by Mr Burt on his visit to New York last week for the Bermuda Business Development Agency’s New York Executive Forum.

In another, he spoke with the team from Yahoo Finance’s Tech Talk.