Regulations in the Crypto Bahamas are crucial when the government expresses interest.

To address the future of digital assets, SALT’s Crypto Bahamas gathered together traditional financial players, crypto businesses, and industry experts.
Last week, the crypto community and Wall Street met in Nassau, Bahamas, for SALT’s Crypto Bahamas conference to talk about the future of digital assets. This year, FTX, the cryptocurrency exchange run by Sam Bankman-Fried, also co-hosted the SkyBridge Alternatives Conference (SALT).

In a press conference that opened Crypto Bahamas, Anthony Scaramucci, the creator of the hedge fund SkyBridge Capital, stated that the event’s purpose was to bring together the crypto community and the traditional financial world:

“Crypto Bahamas unites the audience of the asset management company SkyBridge with the audience of the crypto native FTX. To establish a more just financial system, we are merging these two realms.
Traditional finance is looking at cryptocurrencies as rules form
One of the most noteworthy and apparent features of Crypto Bahamas (many men and women were dressed in suits, while others wore shorts and flip-flops) was the coexistence of conventional financial institutions and crypto locals. For instance, the individuals present at the Crypto Bahamas proved to be the most crucial factor, according to Kevin O’Leary, the Canadian entrepreneur better known as “Mr. Wonderful” for his appearance on Shark Tank.

“Governments from all over the world are present, along with institutional investors who are observing the political climate but do not really hold any cryptocurrencies. They are becoming aware that there will be a significant change soon.
O’Leary claims that institutional investors are now becoming interested in cryptocurrency as a result of recent crypto regulatory frameworks proposed by Senators Cynthia Lummis and Kirsten Gillibrand of the United States and Senator Trey Hollingsworth of the United Kingdom.

They have determined that this asset class is one that will endure, O’Leary said. While this may be the case, he emphasised that many conventional financial institutions still do not own any cryptocurrencies and will not until policy is put in place. “In my opinion, the S&P will add a sector for cryptocurrencies. As soon as the institutions start indexing this, we will be paying 20–30% more. The main discussion at this conference is about that.

To address O’Leary’s point, Henri Arslanian, senior crypto adviser at PwC, told DollarsPower during the conference that the crypto ecosystem should welcome the entry of institutions, noting that these centralised players provide the level of maturity and experience required for working with institutional investors.  According to Arslanian, “this might be advantageous for the entire crypto economy.”

In addition, Scaramucci told DollarsPower that although cryptocurrency is still in its infancy, he believes that during the next five years the market will see significant breakthroughs. Although he was optimistic about the future, he added, “In the short term, we will see headwinds as a result of post-COVID-19, the conflict between Russia and Ukraine, the threat of inflation, and supply chain concerns. Scaramucci continued, “Their objective is to alter the entire financial ecosystem by tokenizing all markets,” and he believes FTX will be the most transformative player overall in the field.

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Build it and they will come
Meanwhile, it seems that the Bahamas will most likely emerge as the next major centre for the cryptocurrency industry. In September 2021, FTX relocated its headquarters from Hong Kong to the Bahamas, and it’s anticipated that other cryptocurrency businesses would follow suit. The country has a regulatory framework in place, according to Bahamian Prime Minister Philip Davis, who also recently produced a policy white paper framework to assist crypto firms in understanding how to operate there:

This will help businesses comprehend how to develop and thrive as well as what we may anticipate from them. The policy also considers the dangers linked with digital assets and the worries consumers may have regarding cryptocurrencies. A policy is put into place to safeguard customers and the building’s integrity while also ensuring that we reduce any hazards that might be connected to the businesses operating here.
According to Scaramucci, the Bahamas is developing into a crypto-centric territory that will be regarded as one of the “most forward-thinking and economically imaginative countries” in the next five years. Arslanian noted that by luring top-performing crypto firms, governments that are supportive of the industry, such as those in the Bahamas and Dubai, have the potential to grow into major global hubs. He claimed that “these jurisdictions are obviously focused on the future of cryptocurrency.” On the other hand, Arslanian emphasised that the United States currently lacks regulatory certainty when it comes to the innovation of cryptocurrencies:

“Before this interview with Chris Giancarlo, the former head of the United States Commodity Futures Trading Commission, I chaired a panel. He gave me a score of zero when I asked him how he would grade crypto legislation in the US on a scale of 0 to 10. Authorities are agile, but they also need to be willing to accept crypto.
Arslanian clarified that examples from Dubai, such as the recently established Dubai Virtual Asset Regulatory Authority (VARA), may be useful for other locations to implement in order to comprehend how the U.S. may enhance crypto rules going forward.

“VARA is a specialised crypto regulator, thus they are quite familiar with this industry. We require additional policy-specific regulators in other areas. FTX received a virtual asset exchange licence in Dubai in March of this year, which was granted under VARA, despite the fact that VARA is a relatively new invention. This allowed FTX to expand its activities in the United Arab Emirates.

Crypto is going through “regulatory chaos,” but the future is promising.

At Crypto Bahamas, the topic of regulatory developments in the cryptocurrency industry received a lot of attention. For instance, central bank digital currencies (CBDCs) and stablecoins were hotly contested topics.

“DeFi Future: Inside the Making of a New Financial System” was the topic of a panel discussion hosted by Sheila Warren, CEO of the Crypto Council for Innovation. Given the innovation taking place in the cryptocurrency industry, Warren told DollarsPower that the next two to three years will determine the course of Web3 and blockchain technology for future generations.

The policymaking arena currently presents the biggest threat, as well as the biggest potential, to cryptocurrency. Now that we have proof and concrete facts, we can show how technology can advance public policy objectives that are, as we can all agree, crucial for society, she said.

Stablecoins and CBDCs both have a place in financial institutions, according to Warren, who discussed the various use cases for both.  Warren, on the other hand, thinks that stablecoins have enormous potential for usage as programmable money. She uttered:

Stablecoins have a crucially vital role to play.

In terms of the bridge it may build between various assets while enabling programability in smart contracts, I believe USD Coin is one of the most significant advances we are currently witnessing in the ecosystem. Stablecoins have my support, but I’m interested in how regulatory regimes will handle them because it will affect our entire ecosystem.
Stablecoins will be the subject of the first crypto-friendly U.S. policy, according to O’Leary. The Stablecoin Transparency Act, which was introduced earlier this year and seeks to audit stablecoins on a 30-day cycle, is what leads him to assume that this will be the case.

They are considering this as a means to bring stability to stablecoins because it is comparable to the money market accounts that Fidelity and Schwab offer. Others will soon follow suit, let’s assume USDC is the first stablecoin to do so,” O’Leary predicted.

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He continued by saying that these restrictions might completely alter the landscape of conventional finance. However, there would be less friction, better openness, and auditability if there were a stablecoin. I could send money in a matter of seconds,” he said.

O’Leary also noted that stablecoin regulation legislation is expected to be passed after this year’s November 8 U.S. midterm elections. O’Leary declared that the leadership would shift. The “most critical endeavour of our time,” said Warren, adding that the crypto industry is currently experiencing “regulatory chaos” and that there isn’t a single jurisdiction right now that isn’t focused on crypto innovation. We are actively laying the groundwork for cryptocurrency in the future.

For context, Scaramucci told DollarsPower that the retirement plan provider Fidelity Investments’ announcement that users of 401(k) retirement saving accounts have the opportunity to invest in Bitcoin (BTC) is a seismic event in terms of advancing crypto legislation. Imagine a tiny portion of the $2.4 trillion in retirement assets that Fidelity is responsible for shifting into Bitcoin.

Scaramucci also disclosed that SkyBridge will soon provide its employees with a Bitcoin retirement option plan. However, he noted that the main issue at hand right now is a Bitcoin exchange-traded fund (ETF) in the United States. By the end of this year, I hope to see a Bitcoin Cash offering. If it does, it will be necessary for all significant financial services companies to offer Bitcoin Cash going forward.