Bermuda announced plans on Monday at the World Economic Forum in Davos to transform into the world's first fully on-chain national economy.
Circle and Coinbase want to provide the necessary digital infrastructure and important tools to ensure the success of the transition.
Bermuda brings payments to the chain
The initiative aims to make digital assets part of everyday life in Bermuda's financial system. Additionally, blockchain-based systems are to support payments and other important economic activities.
Circle and Coinbase are also assisting in this transition by organizing nationwide training on the digital financial world.
'Bermuda is convinced that responsible innovation is best achieved through collaboration between government, regulators, and industry,' said David Burt, Premier of Bermuda. 'With the support of Circle and Coinbase, two of the world's most trusted companies in the digital finance sector, we are accelerating our vision of enabling digital finance at a national level.'
Circle emphasized in a statement that Bermuda's entrepreneurial economy can particularly benefit from the transition to an on-chain economy. Local businesses could benefit from a system that relies less on traditional payment service providers, which often incur higher fees and thus reduce profits.
Bermuda's new plans align with the island's long-standing commitment to digital assets.
The history of digital asset policy
The transition to an on-chain economy is based on several years in which the government has engaged with digital assets.
An important step was the introduction of the Digital Asset Business Act in 2018. The law established guidelines for licenses for exchanges, custodians, issuers, and payment providers in Bermuda.
The oversight for this was under the Bermuda Monetary Authority. This aligned the rules for the new industry with existing standards in the financial sector. Later laws expanded this framework, regulating the issuance of digital assets and providing new guidelines for nationwide reporting on risks.
Government agencies have also engaged with the industry through test programs and so-called 'regulatory sandboxes'. During this time, companies like Circle, Coinbase, and Binance received licenses to operate in Bermuda.
The plans for an on-chain economy thus do not signify an abrupt change but continue the previous course. They are the next step in the long-standing effort to integrate digital assets into the national financial infrastructure.
