Bermuda Partners with Circle and Coinbase to Create a Fully On-Chain Economy

The Government of Bermuda has teamed up with Circle and Coinbase to transition the island nation to a fully blockchain-based economy. This initiative, announced at the World Economic Forum in Davos, aims to enhance digital finance education and provide the necessary tools for local businesses and consumers to adopt new payment systems.

Key Takeaways

Bermuda is partnering with Circle and Coinbase to transition to a fully blockchain-based economy.
The initiative will focus on supporting local banks, insurers, businesses, and citizens with digital finance tools.
The switch to alternative payment systems like Circle's USDC aims to lower transaction costs and improve accessibility.
Bermuda's historical regulatory framework has already attracted over 40 digital asset service providers.
The timeline for full-scale implementation remains unclear, but local businesses are already starting to accept digital payments.

Bermuda taps Circle and Coinbase to build fully onchain national economy.

Transitioning to Blockchain-Based Finance

Circle and Coinbase are collaborating with the Bermuda government to facilitate the nation’s move to a “fully onchain” economy, enabling a shift towards blockchain-based financial transactions. This partnership was unveiled during the annual meeting of the World Economic Forum in Davos, Switzerland, focusing on equipping Bermuda's government, banks, insurance companies, small and medium enterprises, and consumers with essential digital infrastructure.

A central aspect of this initiative includes promoting digital finance education and guiding local residents and institutions on new payment systems powered by blockchain technology. According to the announcement, this initiative aims to bolster Bermuda's dynamic entrepreneurial ecosystem, which comprises thousands of local businesses. Historically, being grouped with Caribbean and other island jurisdictions has led to increased fees and limited access to onshore payment processors, putting pressure on merchants' slim profit margins.

By utilizing alternative payment systems like Circle's USDC, the initiative aims to facilitate “fast, low-cost, dollar-denominated payments.” Transitioning to an on-chain economy is projected to bring additional rewarding benefits, such as diminishing reliance on traditional intermediaries, improving access to global capital, and maintaining a greater share of economic value within the island.

“This initiative is about creating opportunities, reducing costs, and ensuring Bermudians benefit from the future of finance,” stated Hon. E. David Burt, JP, MP, Premier of Bermuda.

Implementation Plans

Government agencies are set to start pilot programs involving stablecoin payments, while financial institutions will integrate tokenization tools. Additionally, local residents will engage in nationwide digital literacy programs to better understand these new financial systems. Although a specific timeline for transitioning these pilots into full-scale implementation was not disclosed, it was mentioned that some businesses have already begun accepting digital payments following a USDC airdrop event that took place the previous year.

Bermuda’s Supportive Stance on Cryptocurrency

Bermuda has made significant strides in its regulatory framework, beginning with the Digital Asset Business Act established in 2018. This regulatory push has attracted more than 40 licensed virtual asset service providers to the island. Circle was among the first global companies to obtain a full Class F DABA license in July 2019. Last year, it revealed its plans to extend its tokenized money market operations within Bermuda. Meanwhile, Coinbase received its own Class F license in April 2023 to establish an international hub on the island.

This initiative marks a crucial step in promoting blockchain technology and cryptocurrency adoption in Bermuda, positioning it as a forward-thinking player in the global digital finance landscape.