By Deirdre Craigwell-Gittens, Attorney-at-Law, Manager, Tax & Legal, Deloitte
The following article has been posted with permission from Business Barbados. The original article, published in Business Barbados 2019, can be found here: http://businessbarbados.com/ebook/2019.html#66
In the face of rapid changes to the global business landscape, Barbados is well-positioned to remain an important player in the international business space. The country has a reputation for stability and integrity, a well-established and regulated commercial banking sector, a high standard of living and modern technology. In addition, Barbados is taking steps to enhance its potential as a hub for new technology in the financial services area (“fintech”).
The new buzzword in the world of technology is “blockchain,” although many people remain unclear what the term actually means and how blockchain operates. In simplified terms, blockchain is a digital, decentralized, distributed ledger that provides a way for information to be recorded, shared and maintained by a community. Blockchain is characterized as being near real-time, reliable and available, transparent, irreversible and immutable. It is the technology that supports cryptocurrencies such as bitcoin, and the financial services industry has been an early adopter with significant current investment and activity in blockchain.
Blockchain technology has the potential to change the way that individuals go about their daily lives, the way businesses interact with each other, the transparency of processes and data and, ultimately, the methods and productivity of doing business in Barbados.
This article explains why Barbados is likely to remain relevant and could become the blockchain hub of the region in the near future. To contextualize this, it is useful to consider what is happening in other countries.
Switzerland is regarded as one of the largest fintech hubs in the world, and the government and key stakeholders strive to facilitate doing business in the country. For example, a major challenge facing cryptocurrency companies was the ability to open or maintain Swiss bank accounts. In response, the Swiss Bankers Association compiled a list of reasonable checks and conditions that, once met, would allow banks to open accounts for those companies. Malta also seeks to be a blockchain hub; it has reacted to the evolving trends in the financial landscape and developed a framework for cryptocurrency and distributed ledger technologies. The government has enabled blockchain entities to operate in Malta via the establishment of supporting legislation.
Barbados already is a player in the blockchain space, being home to Bitt Inc., a financial technology company that utilizes blockchain and distributed ledger technology to facilitate secure peer-to-peer transactions with mobile currency across a suite of its software and mobile applications. Bitt is recognized as a success story, and its founder has provided consulting for many companies and governments in the Caribbean region. In 2016, the Barbadian-based company grew after attracting a substantial investment from the US to assist with building a financial ecosystem in the region.
Barbados’s reputation and tax treaty network have attracted a wave of new blockchain companies over the last two years, especially from Canada. One such entity is Polymath, a resident and domiciled Barbados company, which is involved in securities platform activities and issues its own tokens known as POLY. In 2018, Polymath and the Barbados Stock Exchange (BSE) entered into a partnership regarding the listing of security tokens on the BSE, which could propel the BSE to new levels of trading activity. Blockchain companies have made a foray in becoming listing sponsors on the BSE: in August 2018, Coin Start Ltd (Coin Start) became the first technology company to become a listing sponsor on the International Securities Market (ISM). Coin Start joined the BSE to promote token listings on the ISM.
To capitalize on these developments, Barbados could consider introducing a technology zone (T-Zone) to attract information technology companies and provide them with tax incentives and a special legal regime. Encouraged T-Zone activities could include the development of artificial intelligence platforms, medical technologies, blockchain software/hardware, cryptocurrency platforms and other distributed decentralized information systems, in addition to the mining of cryptocurrencies.
The new government formed after the May 2018 elections has indicated that it intends to establish a legal framework to enable the legalization of blockchain based business activities and promote the use of cryptocurrencies and other tokens. These pronouncements have generated excitement, and potential investors and service providers are eagerly awaiting this progressive regulatory environment.
Moreover, education and communication on blockchain are beginning to take root in Barbados. Seminars, workshops and committees are continuing the conversation. The limited availability of qualified coders with experience in blockchain is being addressed through training at the University of the West Indies, Cave Hill Campus, facilitated by IOHK, a blockchain research and development company. This program is expected to help provide much needed blockchain specialists in Barbados.
The value proposition of doing business in Barbados is strong. The country’s efforts to fully embrace new technology and to create a compelling mix of business/blockchain community attributes, regulatory attractiveness and tax efficiency should increase its potential to remain relevant in the international sphere.
Just five years after co-founding Bitt Inc., young Barbadian entrepreneurs Gabriel Abed and Oliver Gale are already seasoned warriors in the fintech arena, having battled their way through swathes of red tape and dogged resistance from the traditional banking sector to firmly establish themselves as leading pioneers in the world’s financial technological revolution.
Like most young start-ups, Gabriel and Oliver struggled to remain financially viable, especially when cryptocurrency went through two years of recession. Literally on the brink of collapse, their saviour turned out to be a Trinidadian investor, Peter George of Avatar Capital, who boldly invested his first US$400,000 into the company on the strength of a single presentation. Refinanced and reinforced, Bitt expanded rapidly and, step by step, started to overcome the many regulatory roadblocks that continuously obstructed their path.
In February 2016, Gabriel and Oliver made history when Bitt launched the Barbados digital dollar, the first fiat currency ever pinned to a blockchain. That unprecedented transformational achievement compelled the superstars in the cryptocurrency world to sit up and take notice, including Dr Patrick Byrne, the renowned American entrepreneur, CEO and founder of Overstock.com, who invested an initial US$4 million into Bitt, followed by another US$3 million in March 2018. Significantly, Overstock was the first publicly traded company and the first billion-dollar company to accept Bitcoin as payment.
Having successfully launched mMoney in Barbados, a mobile money app that operates similarly to a debit card but through the user’s smartphone, and with the capacity to also receive money, Bitt has engaged Central Banks throughout the Caribbean to provide the same service. Ultimately, mMoney will enable users to complete transactions on their mobile devices that have traditionally only been done through banks. That kind of positive disruption is a key goal for a business that was conceived as a blockchain company that could make a difference, rather than just a means to make money.
According to Gabriel and Oliver, ‘Bitt is now a beautifully run company with an incredible management team led by CEO Rawdon Adams’. That stability within the company has enabled the two visionaries to take a lateral step, retaining their places on the Board and working in an advisory capacity, but with the renewed freedom to independently pursue their latest new ventures.
Watch this space!