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US Regulatory Crackdown Pushing Crypto Firms to Bermuda
The tighter regulatory action and crackdown in the US have recently forced crypto companies operating in the country to shit their base to the crypto-friendly nation of Bermuda. The friendlier crypto framework of Bermuda has already attracted several firms from the US.
It’s not at all unusual for crypto firms to pick overseas destinations to establish base due to friendlier rules. Previously, top players like FTX chose the Bahamas as their base, however, after it went bankrupt, the Bahamas also tightened its regulatory rules.
Bermuda recently came into the picture with crypto exchange Coinbase choosing to set up its regulatory base there. Thus, it’s now turning into a hotspot for crypto firms looking to relocate. Speaking to The Block, Phil Berg, head of the corporate department at Otterbourg law firm said:
“It’s kind of ironic that we’re praising all of these detailed regulations, when the whole concept of crypto initially was decentralization and no trusted institutions. But because of the punishing that we’ve taken at the hand of regulators in the U.S. by regulation through enforcement and a kind of refusal to rule make and an inability to pass laws, it has really made a jurisdiction with some regulatory clarity attractive.”
Crypto firms have criticized US regulators for adopting the process of regulation through enforcement instead of dialogue. As we know, the US SEC has recently targeted some of the top crypto firms including Kraken, Coinbase, Bittrex, and Genesis.
Bermuda Taking the Limelight with Crypto-Friendly Regulations
Since enacting the Digital Assets Business Act five years ago, Bermuda has focused on building and fine-tuning its crypto regulatory framework. with this Act, Bermuda has formed a licensing regime for issuing, selling, or redeeming digital assets.
Under this license, crypto firms can also operate as a payments service provider using crypto and continue to operate as an electronic exchange. Over the last few years, Bermuda has granted licenses to some of the major crypto firms like Block Inc, its subsidiary Cash App, as well as Circle, the issuer of USDC stablecoin. During an interview at the Consensus 2023 Conference, earlier this month in Austin, Texas, Bermuda Premier E. David Burt said:
“What Coinbase recognized, which is what a lot of other companies have recognized, is that we have a superior regulatory environment. It is, as I’ve said, a race to the top for regulation, and Bermuda has proven that we are a place that you can do that.”
Burt has been quite active in the crypto space and has been actively attending several conferences. The Bermuda Premier recently recalled his visit with US policymakers including the SEC, the Treasury Department, and members of Congress. Commenting on this, Burt said that “it’s unfortunate what has happened in the United States. Not everyone in Congress is clueless to what is going on. There are some really good voices that are trying to get this stuff done. But as you know, they’re suffering from a little bit of an FTX hangover”.
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