“Reckless” if BISX neglects digital assets

• Exchange “actively pursue opportunities” in the space

• Aims to “take care of the backyard” before the outdoors

• Says access to B$ cipher is “inevitable”, “must happen”

By NEIL HARTNELL

Editor-in-chief of the Tribune

[email protected]

The Bahamas International Securities Exchange (BISX) is “actively pursuing opportunities” in digital assets, its chief executive revealed yesterday, adding, “We would be foolhardy to do otherwise.”

Keith Davies, while declining to provide details on what the exchange is developing, told Tribune Business that blockchain technology, cryptocurrency and digital tokens “will be a bit of a future.” for BISX, the global digital asset industry having evolved into a $3,000,000,000 Sector and growing.

Unveiling a vision where the Bahamas’ first and only stock exchange will provide the “avenue” or platform for digital asset innovators and creators, he added that technology and investor interest have advanced to the point where BISX could play a bigger role.

However, Mr Davies said he would initially focus on the domestic market as “it’s very important to take care of your backyard” before looking to expand into international markets. This makes the government’s commitment, as outlined in its ‘white paper’ policy position, to work with the Central Bank to facilitate Bahamian dollar access to digital assets extremely important to BISX’s plans – something which the head of the exchange called “inevitable” and “has to happen”.

While BISX’s scale may pale in comparison to Sam Bankman-Fried’s FTX digital markets, the world’s second-largest cryptocurrency exchange currently building its headquarters in the Bahamas, Davies said he still has believed that the future of capital markets – and securities in particular – lies in digital assets.

“One of the things that is very interesting to us is the level of interaction that can be pursued with digital assets, particularly the digitization and tokenization of securities,” he told this newspaper. “For us, I said many years ago that the future of securities is in digital assets. To the extent that we can leverage this technology for the betterment and advancement of this industry , it’s possible.

“The DARE (Digital Assets and Regulated Exchanges Act) allows it, and so do the people we work with and talk to. There are many avenues that can be pursued, and BISX seeks to pursue them. We are actively seeking opportunities in this space currently.

Mr. Davies declined to provide details on these activities, although he indicated that they are in the process of being finalized and presented to the BISX board of directors for discussion and approval. “We have worked on a few points and are close to some. We’re a few weeks away on that,” he added, declining to expand further.

Asked about the potential size of BISX’s digital asset market, Davies pointed to its existing market capitalization of $9.153 billion. This includes 20 common shares with a combined value of $4.84 billion; $3.5 billion in Bahamas Government Registered Stock (BGRS); some eight preferred stock issues worth $249 million; and nine Bahamas Government Stock (BGS) and corporate bonds valued collectively at $462 million.

“If you can imagine all the securities we have being tokenized and digitized and traded, that’s the size of the market and that goes for private, public and government,” he explained. “It’s a different way of interacting and managing the operation of securities. It modernizes the space.

“The next step from this, in terms of digital, is that it allows for a greater variety of avenues – whether local or international. It allows for a potentially wider audience and provides a level of access and stability that wasn’t there before. For us, when we look at this space and what can be sold, what is a security and what can be symbolized. Think about how creative this can become with things that weren’t meant to be monetized before. That’s the point.

“What I love about this space is that technically, if it can be done, it will be done. It’s a function of time. There are enough creative people in this space, and we have to allow them to be creative and to develop products and services.The exchange will allow them to have this level of access.

While BISX’s traditional securities business “will still be there,” Davies said the key question is, “Where can we take the tokenization and digitization business?” He added that the two parties will “interact” sooner or later, and said of digital assets: “I see it as a big part of our future.

“Someone said many years ago, in the early days of the internet and dot.coms, that he could never imagine anyone buying and selling anything online. That was a fad. These people are probably kicking each other already and have changed their tune,” the BISX general manager said.

“Blockchain, digital assets and crypto are there. There is tremendous interest and focus. There is a huge amount of money behind this and technological advances. It is in our operational and financial interest to operate in this space and see how we take advantage of it. We would be unwise to do otherwise. We are actively seeking opportunities in this area and hope to be a very active participant.

Davies said BISX is focusing on digital asset opportunities in the home first before any decisions are made to expand beyond the Bahamas shores. “It’s very important to take care of your garden before you go into someone else’s garden, so we’ll focus on our market first,” he told Tribune Business. “You are left out if you don’t participate. We must be proactive in our approach. You are left behind by doing nothing.

With The Bahamas’ access to digital assets, particularly in local currency, seen as a major impediment to local participation, the BISX chief said, “The point is this: it’s unavoidable and it has to happen. We want our regulators and our government to actively think about how this will play out and benefit the country. We have to find the answers to make it happen the right way. I commend them for doing so, and it’s in everyone’s best interest to get things done in an orderly fashion. »

Mr Davies spoke as Ryan Pinder QC, the Attorney General, reiterated in the Senate yesterday that the Government’s goal is to make the Bahamas a “digital asset hub” for the Caribbean and Western Hemisphere. In doing so, he unveiled the members of the Digital Advisory Board who will provide policy input to the government and help it stay abreast of trends in a rapidly changing niche.

Besides him, other members include Gowon Bowe, Managing Director of Fidelity Bank (Bahamas); Brian Jones, the leader of Agio; Aliya Allen, attorney for Graham, Thompson & Company; Emmanuel Komolafe, former president of the Bahamas Insurance Association (BIA); Delphino Cassar; Rhonda Eldridge; Kelly Banks; and Dellarese Taylor Russell. Their role, Mr. Pinder said, will be “to continuously monitor the development of digital assets, emerging trends and associated risks”.

He added: “The panel will be responsible for keeping the government, the digital asset policy committee and appropriate regulators fully informed of relevant information.

“They will need to recommend any necessary changes to policy, DARE and other laws to ensure the Bahamas retains its place as a well-regulated digital asset jurisdiction, while continuing to remain relevant and attractive to digital assets are businesses from which to operate, grow and prosper.