Bermuda, a British Overseas Territory, has been famous for its crypto-friendly approach over the past few years. Now, the territory is poised to test run their Central Bank Digital Currency (CBDC).
First Rum, then Other Applications
This week, Bidali, a Canadian FinTech firm, announced that it had partnered with Bermuda’s government to launch a pilot test of the region’s CBDC – the digital Bermuda dollar. The pilot program will see local rum manufacturer Gosling Limited accept payment for the asset via the Stellar blockchain network.
Bermuda’s government had been working towards a possible CBDC since 2018, when it created a comprehensive crypto framework. Since then, it has been making quiet progress as it hopes to be a leader and first mover in a trend that has increasingly captivated the world over the past few months.
The first phase of the program would run soon, with Canadian and Bermudan technology consulting firm Penrose Partners overseeing the entire thing.
The partners are hoping to see the ease at which residents can get their hands on and use the asset. Success with this pilot program will see them expand the digital Bermuda dollar’s use to other local industries.
Speaking on the need for a CBDC, Denis Pitcher, the chief FinTech adviser to Bermudan Premier E. David Burt, explained that the region’s financial and technological space has been underdeveloped for a long time.
With no central bank and limited access to payment processors, the government hopes to use cryptocurrencies to develop its financial ecosystem and improve inclusion.
Bermuda’s Pro-Crypto Government
Burt himself has been a fan of cryptocurrencies for a long time. Speaking to Forbes last year, the Premier – a former programmer and startup founder himself – pointed out that cryp[tcurrencies pose an existential threat to big government and Big Tech firms.
“Facebook and Google make money because they have your data, but they don’t pay for access to your data. However, when you talk about the ability to have infinitesimally-sized pieces of value so someone can pay you […] for using your data … […] the promise of cryptocurrency is to actually take power away from those large companies,” he said.
The upcoming pilot program won’t be Bermuda’s first application for cryptocurrencies. Last September, The Royal Gazette reported that the government had partnered with local stablecoin issuer Stablehousse to roll out a pilot program for a digital “stimulus” token with commercial and residential applications.
At the time, the report explained that both partners had been spurred to get the pilot program underway due to the coronavirus. With the program, the government hoped to enable seamless purchases of food and other products, strengthening the country’s contactless payment industry and providing additional payment methods for citizens.
The pilot program also helped the government distribute relief funds to citizens and companies qualified for coronavirus financial aid. Transactions were handled via a digital wallet managed from a mobile app. Uses can spend the tokens at retail shops and vendors with QR codes.