Over the past two years, a slew of startups and major cryptocurrency firms have set up shop in the Bahamas, including FTX and another major cryptocurrency exchange, OKX. Separately, Tether’s dollar-pegged stablecoin, which is central to the smooth functioning of the crypto market, holds reserves at Bahamian bank Deltec Bank & Trust.
But signs of the damage the FTX debacle is doing to the Bahamas’ status as the emerging cryptocurrency capital are already beginning to emerge.
In December, SALT, the events firm led by former White House communications director Anthony Scaramucci, announced that Cancellation of Crypto Bahamas 2023. Another campaign, D3 Bahamas, was organized by the Bahamas Government and marked as The country’s “Flagship Web3 and Fintech Festival” was originally scheduled to take place in January this year, but has been postponed. A new date has not yet been set.
Carlyle Bethel, founder of real estate tokenization startup Akerage, had planned to raise a venture capital round at D3 and described the delay as “frustrating.” His main concern is that the FTX debacle “shakes potential investors,” making it harder for startups like his to secure the capital they need to scale.
As for other global cryptocurrency businesses with ties to the Bahamas, the reaction has been mixed. Tether is unmoved; CTO Paolo Ardoino said the situation at FTX is by no means a reflection of the Bahamas, where Tether is “strongly considering” opening an office. However, OKX declined to answer questions about its commitment to the country.
Nassau is also home to a growing number of crypto startups, such as the waterfront co-working space Crypto Isle, which aims to bring together siled groups of entrepreneurs and “create a space for people to learn about crypto,” says co-founder Dal Vinia Bain said.
Other startups are partnering with the Caribbean Blockchain Alliance, a non-governmental organization advocating for the adoption of blockchain technology in the region. The organization’s president, Stefen Deleveaux, described the cryptocurrency scene in the Bahamas as “small, but active and growing.”
Neither Bain nor Deleveaux were particularly concerned about the knock-on effects FTX could have on local crypto businesses. Aside from a handful of companies looking forward to direct funding from FTX Ventures, Bain said, “the atmosphere on Crypto Isle hasn’t changed.” Deleveaux pointed to the “tremendous potential” of the local grassroots cryptocurrency movement, which is “ready to move on from FTX.” .
Others see it slightly differently, though. While Rees is confident in the quality of crypto startups in the Bahamas, he said FTX’s collapse is “not good for the industry.”
Specifically, he worries that people often fail to distinguish the actions of a company (or a small number of individuals within a company) from the industry and country in which it operates. As a result, cryptocurrency companies in the Bahamas face a dilemma — even ones like Kanoo Pays, which primarily trades central bank digital currencies (CBDCs), the antithesis of decentralized cryptocurrencies like Bitcoin.
In the two months since FTX’s collapse, the Bahamas has come under scrutiny for its wayward embrace of cryptocurrencies and its approach to regulating the industry. Prime Minister Philip Davis of the Bahamas had to stand on the defensive.
