The sun-drenched British Virgin Islands (BVI) are trying to assert leadership in the cryptocurrency space, an area that is still very much up for grabs by issuing its own national coin. Much of the region is home to crypto expats and is underserved when it comes to banking services. This is why turning to cryptocurrencies creates an opportunity to provide better financial services for Caribbean citizens. In general, cryptocurrencies and its $375 billion market could help to revitalize the Caribbean, a region plagued by slow economic growth and high levels of debt in recent years.
The Breakdown You Need to Know: There are 50 Caribbean islands that make up the BVIs and they have long placed their confidence in the U.S. dollar since the late 1950s. The islands new coin is slated to be pegged one-to-one to the U.S. dollar throughout its territory. Cryptocurrencies have a unique advantage in the Caribbean, CultureBanx reported its because they can easily work around the biggest impediment to the space which is government regulation.
Caribbean economies are highly dependent on trade where the U.S. dollar still reigns supreme. Startups such as Barbados-based Bitt and Caribbean central banks have looked into the creation of digital currencies to help spur regional trade. Ryan Peterson, General Manager for Economic Policy at the Central Bank of Aruba forecasted the introduction of a digital currency system would lead to 4-5% GDP growth for Aruba alone. This is significant, considering the region hasn’t seen more than 0.5% growth for over 20 years, according to Cayman Finance.
Sun, Banking & Crypto: The BVIs are one of the world’s largest cryptocurrency markets by dollar volume, according to CoinShares. However, other Caribbean islands such as Puerto Rico have seen a huge uptick in cash related to cryptocurrencies, which are held by the islands International Financial Entities (IFE). These IFE’s rocketed to $3.3 billion at the end of 2017 from $191 million a year earlier.
The Bitfinex exchange is based in the British Virgin Islands and it recently turned to Puerto Rico’s Noble Bank to take up the mantle as its custodian, according to Bloomberg. This occurred after Wells Fargo stopped processing wire transfers for Bitfinex early last year. Some of Bitfinex’s customer activities at Noble may be shielded under IFE rules because of its British Virgin Island registry. Bloomberg reported Noble is in the process of recruiting other exchanges to use its banking services.
Caribbean Crypto Craze: Puerto Rico is seen by many as leading the cryptocurrency charge in the caribbean, but they are not alone. There are eight other Caribbean island economies which make up the Eastern Caribbean Central Bank (ECCB) exploring digital currency opportunities. They have considered issuing their own cryptocurrency called the Digital Eastern Caribbean dollar (DXCD).