Global crypto adoption continues to grow as the Bahamas have now allowed citizens to pay taxes in digital assets. It marks a shift in sentiment by governments and banks around the world on the use of digital currencies within their economies. While early adopted El Salvador was regarded in many quarters as eccentric when it embraced BTC as an alternative currency, it is now being followed by other nations.
Bahamas Prime Minister Philip Davis said last week: “We have a vision to transform the Bahamas into the leading digital asset hub in the Caribbean.”
The announcement of their strategy to increase digital asset adoption came just a week before the Crypto Bahamas conference, which will be attended by guests such as former U.K. Prime Minister Tony Blair, former U.S. President Bill Clinton and NFL quarterback Tom Brady.
In addition, the government in the Bahamas will allow residents to use the Bahamas CBDC (central bank digital currency), called the Bahamas sand dollar, to access digital assets.
Sixty CBDCs currently in the works
A report from PwC last year showed that amongst the 60 CBDCs that are in the works worldwide, the Bahamas ‘Sand Dollar’ is ahead of the curve. PwC ranked the top 10 retail CBDC initiatives around the world based on project maturity, with the Sand Dollar coming first.
But the Bahamas is not alone in its enthusiasm for crypto: the central bank of Mexico said last week that it expected Mexico will have its own central bank digital currency in circulation by 2025. This was according to Victoria Rodriguez Ceja, governor of Banxico, during a senate before the Mexican senate. In February Nirmala Sitharaman, India’s finance minister, said the Reserve Bank of India would introduce a digital rupee sometime during the next financial year.
In India’s case this represents a major U-turn in policy, as the country had originally threatened to ban all private cryptocurrencies from being traded domestically. This law was defeated in India’s Supreme Court in March 2020.
The UK is also navigating something of a dual policy narrative on cryptocurrencies. While it remains illegal to offer ETFs or CFDs for retail sale in the UK, the Treasury has rolled out a major plan to make London the cryptocurrency capital of Europe. While the plans still look a little woolly, they seem to coalesce around a desire to make the UK a crypto hub in terms of the supporting infrastructure for digital currencies and blockchain. How this will translate into product development and future authorisations remains to be seen.
Majority of central banks considering CBDCs
“CBDCs aim to increase efficiency in payments, cut costs of financial services and tighten up control on cash-enabled fraud,” said Marcus Sotiriou, an analyst with UK digital asset broker GlobalBlock. “According to a recent report from PwC, the vast majority of central banks are considering launching a CBDC.”
Analysts at PwC said: “We expect that CBDCs will greatly benefit cross-border transactions and economies of all relevant jurisdictions.”
“Despite the issues of privacy associated with CBDCs, I think they will be a significant catalyst for mainstream adoption of cryptocurrencies,” said Sotiriou.
Currently we look to be in a situation where smaller, more agile players like the Bahamas are in a position to bring in legal tender and one of the biggest crypto investment events in the western hemisphere, while major economies try blunder their way towards some form of consistent policy.
