FTX Destroyed Crypto Party in Heaven

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Other startups are working alongside the Caribbean Blockchain Alliance, an NGO that advocates for the adoption of blockchain technology in the region. Stefen Deleveaux, president of the organization, describes the crypto scene in the Bahamas as small, but active and growing.

Neither Bain nor Deleveaux expressed any particular concern about the ripple effects FTX could have on local crypto businesses. With the exception of a few companies that were anticipating direct funding from FTX’s venture capital division, Bain says the mood at Crypto Isle hasn’t changed. Deleveaux points to the huge potential of the grassroots grassroots crypto movement, which is all set to transition from FTX.

Others see things a little differently, however. Although Rees is confident in the quality of Bahamian crypto startups, he says the collapse of FTX is not good for the industry.

Specifically, he worries that people generally fail to distinguish between the actions of a company (or a handful of individuals within a company) and the industry and nation in which it operates. . As a result, crypto companies in the Bahamas are facing a tarring even from companies like Kanoo Pays, which deal primarily in central bank digital currencies (CBDCs), the antithesis of decentralized cryptocurrencies like Bitcoin.

In the two months since FTX’s collapse, the Bahamas’ deliberate adoption of crypto has come under the microscope, along with its approach to industry regulation. And Philip Davis, Prime Minister of the Bahamas, had to get defensive.

New crypto regulations under the DARE Act had been proposed long before the FTX allegations surfaced. A report released in April 2022 by the Government of the Bahamas set out a vision to further capitalize on the remarkable opportunity offered by digital assets. But framed by the FTX debacle, it makes for a tough read.

The plan, which included provisions relating to crypto trends such as non-fungible tokens (NFTs) and decentralized finance (DeFi), promised to cement the country’s reputation as a leading center for digital assets, according to the report, but also to ensure that only well-managed, reliable and successful digital asset businesses, capable of maintaining the good reputation of The Bahamas, are allowed to operate from the country. Ouch.

The Bahamas Securities Commission, which viewed the report, declined to comment on how the collapse of FTX might inform regulatory reform. The prime minister’s office did not respond to requests for comment.

But Malcolm says DARE cannot have enabled the alleged FTX fraud, which is covered by provisions that require companies to maintain adequate controls, protect investor assets, [and] maintain adequate financial resources. She describes the idea as a massive characterization error that paints an unfair picture of the Bahamas.

Bain also takes issue with the light the country has been cast in by the media. Although the FTX debacle was a blow to the global cryptocurrency industry, she says the specific impact on the Bahamas has been exaggerated: This idea that FTX has left a gaping hole in our economy or the fabric of our society is simply not true.

If a country is equipped to recover from such a reputational setback, Rees says, it’s theirs. Inasmuch as any nation can have a unique worldview, Rees says the Bahamas is one of relentless optimism. The Bahamas is the Bahamas, he says. We were here yesterday, and well be here tomorrow.

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