by Marlon Yarde, CEO & General Manager, Barbados Stock Exchange and Terry Belgrave, ISM Business Development Associate, Barbados Stock Exchange
Distributed ledger technology (DLT), a harbinger of the fourth industrial revolution, is set to rekindle, redress and revamp the nature of trust in the global economy. Barbados has actively embraced this technology and looks to further explore its capabilities in an effort to streamline business facilitation on the island.
Companies have always chosen Barbados for its traditional features – strong ICT infrastructure, political stability, flight interconnectivity, and the country’s high quality of life. Increasingly, however, it is Barbados’ welcoming embrace of DLT that is becoming yet another attractive feature. Barbados is now home to a number of DLT companies, including Shyft, Polymath, and Aion, to name a few. These companies cite the onshore availability of both qualified IT talent and companies with a similar focus, as key factors in their respective relocation decisions. All are committed to expanding their operations. All are committed to developing Barbados. The result – a dynamic, burgeoning ecosystem that has fostered both innovation and collaboration.
Access to a strategically-negotiated tax treaty network rounds out the Barbados DLT value proposition. This treaty network, designed to promote tax-efficient investment protection, has been augmented by the convergence of Barbados’ local and international tax rates, recently approved by the Organisation for Economic Cooperation and Development.
To see why Barbados views DLT with such promise, it is helpful to consider the technology’s raison d’être – decentralising trust.
The Trust Paradox
Trust deficits explain why there is a need for referees in sports, legal systems for dispute resolution and clearing systems for capital market counterparties. Trust is more than a concept – it is a fundamental construct that is an essential prerequisite for societal cohesion and (therefore) development.
Poor societies can be characterised by their broad lack of institutional confidence. This is in stark contrast to advanced economies, where faith is generally placed in the credibility and viability of their institutions. A fundamental need for trust in society gives rise to the importance of centralised, third-party intermediaries. These intermediaries, created specifically for their independence, are inherently appreciated for providing impartiality and valued consensus.
Decentralisation: The DLT Value Proposition
DLT’s most famous form of implementation, known as the “blockchain,” is set to re-engineer trust to unparalleled heights. By recording data onto a list of blocks – blocks that are sequentially linked using cryptography – blockchains can eliminate the need for a centralised, trusted counterparty. This list, or “ledger” of blocks, is stored and maintained by a network of users (known as “nodes”) that collectively validate each new block while keeping synchronized replicas of the entire ledger.
DLT, Digital Assets and Barbados
The Barbados Stock Exchange (BSE) believes that digital assets can be a game-changing offering. As these assets utilise blockchain technology, they allow for greater access to investment opportunities while providing enhanced trading, clearing and settlement. Prospective issuers should be mindful, however, of securities laws – both in their jurisdiction of domicile and in each of the jurisdictions in which they intend to raise investment capital.
The BSE views ‘security tokens,’ a particular type of digital asset, as both fit for purpose and vanguard in nature. Security tokens are analogous to contemporary securities – debt, equity and investment contracts. These tokens, therefore, find a natural fit within Barbados’ securities legislation – a reality that is of great comfort to the BSE’s regulator, The Financial Services Commission. The exchange is actively pursuing a trading engine for these assets, having already designed the rules and guidance for their listing and trading
The BSE’s commitment to DLT adoption is part of a wider focus on transformative development. Barbados’ evolutionary embrace of distributed ledger technology, digital asset trading and business facilitation are welcomed developments – a tripartite coalescence, to be sure, that has helped to reposition Barbados as an innovative place to do business.