U.S. commercial bank Signature will start to offer a full range of banking services to licensed fintech companies in Bermuda, including those in the digital asset industry. The bank has reached an agreement with the government to provide the service, moving in to fill the gap left by local banks, which have been reluctant to deal with the island nation’s growing fintech community.
“Signature Bank’s willingness to consider Bermuda-licensed businesses for banking services is a significant vote of confidence in and endorsement of Bermuda’s efforts to create a leading high standard regulatory regime for fintech business,” Bermudian premier David Burt said in statement on Feb. 28.
The island’s legal clarity on cryptocurrency and other disruptive financial technologies has made it a choice destination for tech businesses. Signature Bank’s entrance introduces banking services customized for these companies with government blessing.
Prime Minister Burt lauded the partnership as an incentive for companies looking to operate physically in his country. “As a result of our business development and promotional efforts, 66 fintech companies have been incorporated in Bermuda,” the premier said.
“However, the absence of banking services for fintech companies has been an impediment to those companies who are looking to establish a physical presence in Bermuda,” he added.
Improved Regulatory Landscape
In October last year, U.S.-based technology firm Uulala became the first company to gain ICO approval from the Bermuda government, following the introduction of the country’s regulatory framework on cryptocurrency earlier in 2018.
Along with Malta, Gibraltar and Liechtenstein, Bermuda has been working around the clock to attract cryptocurrency companies. Malta passed three laws in July last year to ease the requirements for companies involved in minting new cryptocurrencies and trading existing ones.
The influx of these companies has been helped by the fact that the regulatory efforts many larger economies has been meek, comprising little more than domiciling new technologies to the traditional financial sector and applying illiberal state oversight.
“Bermuda is setting itself apart by providing regulatory certainty combined with a world-renowned reputation for transparency and the highest standards of global compliance,” stated premier Burt.
While Bermuda has been proactively regulating the digital assets space to be at the cutting edge of business developments, its new American banking partner has also been targeting financially progressive jurisdictions. The bank has recently launched a regulator-approved blockchain-based platform for managing money transfers in New York.
As of February 28, Signature Bank has been accepting banking applications from Bermuda-licensed companies. Its president and CEO Joseph Depaolo said Signature’s blockchain-based Signet system is facilitating the transfer of millions of dollars daily since its launch at the beginning of the year.
“Currently, we are seeing trades in the millions some days and tens of millions other days … Signature Bank is one of the few banks in the U.S. that will provide deposit accounts and corporate debit cards to cryptocurrency startups but we are seeing non-crypto businesses signing up as well,” he said.
What do you think about Bermuda’s efforts at building its fintech industry? Let us know in the comments section below.
Images courtesy of Shutterstock and Signature.
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Jeffrey Gogo is an award winning financial journalist based in Harare, Zimbabwe. A former deputy business editor with the Zimbabwe Herald, the country’s biggest daily, Gogo has more than 15 years of wide-ranging experience covering Zimbabwe’s financial markets, economy and company news. He first encountered bitcoin in 2014, and began covering cryptocurrency markets in 2017