Other startups work alongside the Caribbean Blockchain Alliance, an NGO that advocates for the adoption of blockchain technology in the region. Stefen Deleveaux, president of the organization, describes the crypto scene in the Bahamas as “small, but active and growing.”
Neither Bain nor Deleveaux expressed particular concern about the knock-on effects FTX could have on local crypto businesses. With the exception of a few companies that were anticipating direct funding from FTX’s venture capital division, Bain says “the mood at Crypto Isle hasn’t changed.” Deleveaux points to the “massive potential” of the local grassroots crypto movement, which is “quite ready to move on” from FTX.
Others see things slightly differently, though. Although Rees is confident in the quality of Bahamian crypto startups, he says the collapse of FTX is “not good for the industry.”
Specifically, he is concerned that people typically fail to distinguish between the actions of a company (or handful of individuals within a company) and the industry and nation in which it operates. As a result, crypto companies in the Bahamas face a tarring—even firms like Kanoo Pays, which deals predominantly in central bank digital currencies (CBDCs), the antithesis of decentralized cryptocurrencies like Bitcoin.
In the two months since FTX collapsed, the Bahamas’ willful embrace of crypto has come under the microscope, along with its approach to regulating the industry. And Philip Davis, prime minister of the Bahamas, has had to come out on the defensive.
New crypto regulations under the DARE Act had been proposed long before the FTX allegations emerged. A report published in April 2022 by the Bahamian government set out a “vision” for capitalizing further on the “remarkable opportunity” presented by digital assets. But framed by the FTX debacle, it makes for difficult reading.
The plan, which included provisions relating to crypto trends like non-fungible tokens (NFTs) and decentralized finance (DeFi), promised to cement the country’s reputation as a “leading digital asset hub,” the report asserted—but also to ensure that “only well-run, trustworthy, and thriving digital asset businesses, which are able to … sustain the good reputation of The Bahamas, are allowed to operate from the country.” Ouch.
The Bahamas Securities Commission, which consulted on the report, declined to comment on how the FTX collapse might inform regulatory reform. The office of the prime minister did not return requests for comment.
But Malcolm says DARE cannot have enabled the alleged FTX fraud, which is covered off by provisions that require businesses to “maintain adequate controls, safeguard investor assets, [and] maintain adequate financial resources.” She describes the idea as “a massive mischaracterization” that paints an unfair picture of the Bahamas.
Bain also takes issue with the light in which the country has been cast by the media. Although the FTX debacle has dealt a heavy blow to the global cryptocurrency industry, she says the specific impact on the Bahamas has been “overblown”: “This idea that FTX has left a gaping hole in our economy or the fabric of our society—it’s just not true.”
If any country is equipped to recover from a reputational setback of this kind, says Rees, it’s his own. To the extent that any nation can have a single worldview, Rees claims the Bahamas’ is one of relentless optimism. “The Bahamas is the Bahamas,” he says. “We were here yesterday, and we’ll be here tomorrow.”