When you think of the Caribbean you probably think of sandy white beaches, a turquoise blue ocean, luxury resorts surrounded by palm trees, exactly, everything you need for a perfect holiday! No wonder that the Caribbean islands are known to people from around the world as a popular tourist destination.
But lately another topic has been increasingly attracting attention: Cryptocurrencies and Bitcoin in the Caribbean.
A growing number of countries in the region are recognizing and embracing the growing economic importance of cryptocurrencies and back them up through legislation.
Why? In this article our experts at Relocate Antigua will provide you with all the essential background information and update you on the latest cryptocurrency trends in the Caribbean. And of course, we are going to give you an overview of legal regulation and government funding of cryptocurrencies in the most important Caribbean countries. Let’s get started!
From the beginnings of Bitcoin to the rise of cryptocurrencies in the Caribbean
The Bitcoin white paper was published in 2008 under the pseudonym Satoshi Nakamoto. Soon after the first cryptocurrency Bitcoin entered the market. The rest is history. Since then many more cryptocurrencies have emerged and the market has grown. So have the crypto asset management tools. They not only make things easier for experienced traders, but also help opening up the market for less knowledgeable investors as more and more people are looking for a way to invest in the digital gold: Bitcoin. Read more in our article: “What is crypto asset management?”.
While stance on cryptocurrencies vary between the countries in the Caribbean, it is undeniable that a growing number of Caribbean governments believe that cryptocurrencies will boost their economy. This is reflected in their eagerness to learn more about the industry as well as in governments efforts to regulate the sector. Something that much bigger countries are reluctant to do.
Some Caribbean countries on the other hand, either already have or are about to establish a regulatory framework for cryptocurrency exchanges and their customers. This will likely bring more trust and credibility to the sector and therewith make their countries more attractive to crypto companies and investors.
Through these efforts a growing number of Caribbean countries may emerge at the forefront of the fintech sector and the crypto asset scene. Which brings new economic opportunities to a region that is known for slow economic growth and high depts.
The Caribbean Tourism Organization (CTO) is also turning towards cryptocurrencies and announced that paying with Bitcoin for products and services in the tourism industry should soon be possible. With this they hope to introduce a more cost-effective and efficient means of payment to the Caribbean tourism industry. To achieve this the CTO has reached an agreement with Bitt Inc..
Bitt Inc. is a Barbados-based Blockchain company that is also involved in other important developments in this area such as the development of the Digital Eastern Caribbean Dollar, a central bank digital currency.
As tourism is one of the most important industries in the Caribbean, bringing together tourism and Bitcoin also says a lot about the economic potential the CTO sees in the use of Bitcoin.
However, many countries in the Caribbean still have no cryptocurrency regulations, which means that the companies issuing cryptocurrencies are unregulated and therefore more risks are involved. This is why we have put together an overview of the current legal situation in the Caribbean.
Cryptocurrencies Caribbean – Regulations and usage
Cryptocurrencies are getting more and more popular in Cuba and may solve problems caused by the US trade embargo. Cryptocurrencies such as Bitcoin can be a door opener and allow Cubans to access services, they weren’t able to access before due to the US trade embaro. Currently Bitcoin is used for various things such as topping up phones or to shop online.
But the use of Bitcoin and other cryptocurrencies in the country is controversial as cryptocurrency regulations do not exist and trading cryptocurrencies is in the gray legal area. The website Cointobuy ranks countries according to their cryptocurrency safety. Out of 249 countries Cuba only ranks as number 239.
The missing legal framework for trading cryptocurrencies in combination with the US trade embargo and poor internet, hasn’t made Cuba the go to place for important and large crypto exchanges. The first cryptocurrency exchange operating in the country was Fusyona, which is registered in Brazil. With Qbita the first Bitcoin exchange from Cuba for Cuba has launched in spring 2020. It was developed by a Cuban-Italian entrepreneur Mario Mazzola, who also developed the Qbita Bitcoin wallet.
When it comes to cryptocurrencies safety Haiti doesn’t do much better than Cuba and is ranked by Cointobuy on rank 208 out of 249. Just like in Cuba there is no legal framework to regulate cryptocurrencies and their status is controversial.
The government of the Dominican Republic banned the use of cryptocurrencies in transactions. In 2017 the Central Bank stated that the national currency (Dominican Republic Peso) is the only legal means of payment.
While selling and buying bitcoin is legal in Barbados, until now Barbados doesn’t have cryptocurrency regulations, the Central Bank of Barbados has a positive attitude towards Bitcoin though.
The Financial Service Commission and the Central Bank of Barbados established a Regulatory Sandbox. Here e.g. companies can test their innovations in a controlled real-world environment while at the same time protecting other parties such as consumers and stakeholders from undue risk.
The blockchain-based company Bitt Inc. is based on Barbados. In 2020 they became the first company to compete and exit the Regulatory Sandbox. Here they had the opportunity to test their blockchain-based financial technology business models, products and services.
Furthermore, in 2019 Bitt Inc. together with the Eastern Caribbean Central Bank (ECCB) signed the contract to conduct a Central Bank Digital Currency pilot within the Eastern Caribbean. Read more about this here: Digital version of the East Caribbean dollar.
Antigua and Barbuda
With the Digital Asset Business Bill 2020 the House of representatives passed a cryptocurrency regulation bill in May 2020 and therewith took an important step to become a more digital asset friendly destination.
The regulatory framework elaborated in the bill aims to regulate digital asset businesses. For example, cryptocurrency companies that issue, sell or redeem virtual coins must be licensed. The same goes for companies that operate as payment services, exchange services or companies that provide services such as custody of wallets. Those regulations are meant to protect digital asset exchanges as well as their customers.
Furthermore, Bitcoin could be used as an official means of payment very soon. A bill is developed which should secure the status of a legal currency for Bitcoin. Antigua and Barbuda have recognized the importance of Bitcoin for a while now. In 2018, for example, the parliament has amended its Citizenship by Investment Program. Those changes now allow payments in Bitcoin.
After pilots were carried out on two islands of the Bahamas in December 2019, less than a year later, in October of 2020, the Central Bank of the Bahamas launched the “Sand Dollar”. The “Sand Dollar” is a digital version the Bahamian dollar and pegged to the Bahamian dollar. The central bank digital currency (CBDC) is issued by the country’s monetary authority. This makes the Bahamas the first country in the world to release a central bank digital currency.
The Digital Assets and Registered Exchanges Bill was drafted by the Securities Commission of the Bahamas (SCB) in 2019 and was completed in 2020. Once it is enacted it will regulate digital asset businesses and services as well as initial token offerings (ITO’s). At the moment though cryptocurrencies are still unregulated in the Bahamas.
Currently, cryptocurrencies are not regulated in Jamaica. In 2018 the Bank of Jamaica even warned against the use of virtual currencies and the risk due to missing consumer protection and other factors.
However, just like the Bahamas and the Eastern Caribbean Central Bank, Jamaica now also considers using its own central bank digital currency as a legal tender. The Bank of Jamaica announced that a testing phase for the digital currency is planned for late 2020.
The Jamaica Stock exchange (JSE) announced in 2019 that it is about to enable live trading of digital assets in a secure environment. This came after a live-trading pilot was completed successfully. The JSE has signed an agreement with the Canadian FinTech company, Blockstation to enable the live trading of security token offerings and digitals assets.
British Virgin Islands (BVI)
Although the BVI government has indicated its interest in establishing a supportive legal framework for cryptocurrencies there is no draft legislation yet, meaning up-to-date there is no law which regulates cryptocurrencies nor ICOs or blockchain.
However, in July of 2020 the BVI Financial Services Commission issued guidance on regulation of virtual assets. This is meant to clarify how the already existing regulatory framework applies to virtual assets and therefore also to coins such as Bitcoin. Details can be found here.
As part of boosting the Financial Technology sector the British Virgin Islands announced at the end of 2019 that the blockchain Startup LifeLabs is a about to develop a sovereign digital currency named BVI~LIFE, which will take the form of a stablecoin, which means it’s linked back to an external asset in this case it will be backed up by the USD. One BVI~LIFE coin will be backed by USD 1. Since 1958 the British Virgin Islands currency is USD. The plan is to make BVI~LIFE coin available for residents as well as for tourist. It should speed up transactions as well as lower transactional fees.
Digital version of the East Caribbean Dollar
Currently 11 countries are members of the Organization of East Caribbean States (OECS) :
- Antigua and Barbuda
- British Virgin Islands
- St. Kitts and Nevis
- St. Lucia
- St. Vincent and the Grenadines
The inter-governmental organization is dedicated to economic development in the region as well as to the protection of legal and human rights.
Members of the OECS are about to follow the Bahamas with launching a blockchain-powered central bank digital currency pilot. The pilot will be rolled out in the following countries which are part of the Eastern Caribbean Currency Union:
- Antigua and Barbuda
- Saint Lucia
- St. Kitts and Nevis.
The project started in 2019 when the Eastern Caribbean Central Bank (ECCB) and the Barbados-based fintech company Bitt Inc. signed the contract to conduct a Central Bank Digital Currency pilot within the Eastern Caribbean Currency Union.
A digital version of the East Caribbean Dollar is part of the pilot and will be used in the Eastern Caribbean Currency Union by licensed financial institutions as well as non-bank financial institutions. Learn more about this topic in our article: “Blockchain-based digital version of the Eastern Caribbean Dollar”
Conclusion – Cryptocurrencies are of the rise in the Caribbean
While cryptocurrencies are on the rise in the Caribbean, cryptocurrencies regulations vary a lot depending on the country. While some governments like Antigua and Barbuda or the Bahamas have recognized the economic importance of cryptocurrencies by drafting a legal framework other countries remain inactive, which leaves cryptocurrencies in a gray legal territory.
But when it comes to digital currencies in the Caribbean one should not only take a look at the individual countries, but also at the projects that are developed in a network of several countries. In this context you are likely to hear the name Bitt Inc. fairly often as they are currently involved in major projects with the Caribbean Tourism Organization as well as with the Eastern Caribbean Central Bank. One has the goal to allow payments in Bitcoin in the tourism industry, the other is creating the Digital Eastern Caribbean Dollar which should soon be available in the Eastern Caribbean Currency Union.
No doubt, there is a lot going on in the Caribbean cryptocurrency universe in the recent years and there is likely more to come. If the importance of cryptocurrencies in the region continues to grow, it is likely to attract more investors and companies from this sector.